Pound to Australian & New Zealand Dollar Exchange Rates Climb, GBP USD Dives as Jobs Boost US Dollar

Modified: Friday, 5 July 2013 17:10 BST - Written by David Woodsmith

STORY LINK Pound to Australian & New Zealand Dollar Exchange Rates Climb, GBP USD Dives as Jobs Boost US Dollar

This afternoon’s US labour market figures made for positive reading for investors holding US Dollar-denominated assets. The news that the world’s premier economy added a greater than expected 195,000 new jobs to its combined payroll, (excluding those in the farming sector), last month has sent the markets into a tailspin, with the Greenback being the major beneficiary.

The strong American job creation figure for June was re-enforced by an unexpected upward revision to April and May’s Non-Farm Payroll data, meaning the 70,000 more new positions than had previously been expected had been created in these two months.

The figure triggered strong support for the US Dollar which saw the Pound to US Dollar exchange rate (currency : GBP USD) drop like a stone. The pair had been holding above the 1.5000 threshold during the early part of the day, but had settled down in the 1.4800s just before America’s equities markets re-opened following their Independence day shutdown.

The American labour market data had a pronounced effect on several other major currencies apart from the Buck; the Australian and New Zealand Dollars both gave up ground in the aftermath of the NFP print. This saw the Pound to Australian Dollar exchange rate (currency : GBP AUD) climb to as high as 1.6370 earlier, while the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) moved back above the 1.9200 level in the aftermath of the US publication.

The shift out of risk-laden currencies including the AUD and NZD was driven by the effect which the positive American jobs data had on investors’ thoughts regarding the likelihood of a near-term reduction to its Quantitative Easing programme by the US Federal Reserve. The general feeling amongst market participants is that a scaling back of ‘easy money’ by the Fed would hurt the export dependent Aussie and Kiwi Dollars.

Current exchange rates mentioned in this article are as follows: Pound to Euro exchange rate: 1.16228 GBP/EUR (-0.37%), Pound to Dollar exchange rate: 1.49024 GBP/USD (-0.91%), Pound to Australian Dollar exchange rate: 1.64287 GBP/AUD (-0.07%) and Pound to New Zealand Dollar: 1.93286 GBP/NZD (+0.62%)

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