Outlook For GBP USD, GBP AUD & GBP NZD Exchange Rates Hinges On US GDP Data

Published: Thursday, 30 May 2013 09:00 BST - Written by Frank Davies

STORY LINK Outlook For GBP USD, GBP AUD & GBP NZD Exchange Rates Hinges On US GDP Data

Perhaps the key event of note during yesterday’s afternoon session in the global currency markets came in the form of comments from European Commission President Jose Manuel Barroso. For several years now, the eurozone’s policymakers have enforced draconian austerity measures on several of the region’s peripheral states, including Ireland, Portugal and perhaps most notably Greece. The swingeing spending cuts and tax hikes were introduced by the EU/IMF/ECB ‘Troika’ as a type of payment in kind for multi-billion euro tranches of emergency bailout funding for struggling countries. The Troika also imposed budgetary restraints on nation states including France which had not approached them, begging bowl in hand, looking for bail out funding.

In recent months, the Troika’s rigid austerity policy has been called into question, and the audible level of these concerns was heightened following a report by the OECD, released yesterday morning, which saw the eurozone’s 2013 GDP growth forecast trimmed to -0.6%. The development prompted Barroso to announce that Europe’s leaders would now take a more balanced approach to balancing their collective books. His announcement that the eurozone’s nation states would be afforded increased timescales for introducing their austerity packages is seen as a sign that the region’s leaders are keen to, at least partially, adopt a ‘go for growth’ policy stance.

The news played relatively well with global currency market participants, with the Pound to euro exchange rate (currency : GBP EUR) testing lower during the middle part of yesterday’s session. This saw GBP EUR dip down to as low as 1.1630 before the single currency pulled back late on. Near term price action for the closely-watched pair will be determined by this morning’s whole of eurozone Consumer Confidence survey. A strong showing is expected.
The other key risk event of note during today’s session comes this afternoon with the release of the latest US Q1 GDP data. An upward revision from the last print of an annualised 2.5% would be likely to send the GBP AUD and GBP NZD as well as the GBP USD rates sharply lower.

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