Exchange Rates Forecast: Pound to Australian Dollar & Pound to New Zealand Dollar Could Fall

Modified: Tuesday, 28 January 2014 10:22 BST - Written by Toni Johnson

STORY LINK Exchange Rates Forecast: Pound to Australian Dollar & Pound to New Zealand Dollar Could Fall

Dismal US New Home Sales data, released during yesterday’s afternoon session, painted a bleak picture of the state of the real economy in the States. The month-on-month figure for December revealed an unexpected drop-off of some 7.0%, while November’s counterpart number was downgraded to -3.9%. The US property sector was largely responsible for plunging the world economy into a near-catastrophic credit crisis six years ago as American mortgage lenders foreclosed en masse on ill-advised non-conforming loans. Yesterday’s figure suggested that the ailing US property market has a long way to go in order to return to its pre-2007 level.

The disappointing US housing ecostat caused the Greenback to leak support during the middle part of yesterday’s North American equities session, sending the Pound Dollar exchange rate (currency : GBP/USD) up to close to the 1.6600 level. The real fear for investors holding Dollar-denominated assets is that the tame American housing figure will cause the Federal Reserve’s FOMC to decide not to further reduce its $75bn per month Quantitative Easing programme on Wednesday night. With analysts pricing in another $10bn cut to QE, a ‘no change’ decision from the Fed’s policymembers would be likely to send GBP USD up towards the 1.7000 threshold.

Elsewhere, the VIX index, which gauges the level of fear in the markets by measuring the number of protective ‘put’ orders placed by equities traders in the US. The latter part of last week saw VIX leap from below the 14.00 level on Thursday morning to close to 17.00 yesterday. The increase in fear levels was driven by concerns about the state of the Chinese economy and by a series of weak earnings reports from US companies as last week drew to a close. Yesterday afternoon saw market participants regain their nerve and VIX ended the day back in the low 15.00s once more. The move could signal downside to come for the Pound Australian Dollar exchange rate and Pound New Zealand exchange rate.

Important Australian Dollar & New Zealand Dollar Exchange Rates (PUpdated: 10:00 GMT 28/01/2014)

The Pound Sterling to Australian Dollar exchange rate is trading down -0.91% at 1.88109 GBP/AUD.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0.83% at 1.99903 GBP/NZD.
The Euro to Australian Dollar exchange rate is trading down -1.05% at 1.54978 EUR/AUD.
The Euro to New Zealand Dollar exchange rate is trading down -0.97% at 1.64695 EUR/NZD.
The US Dollar to Australian Dollar exchange rate is trading down -0.75% at 1.13680 USD/AUD.
The US Dollar to New Zealand Dollar exchange rate is trading down -0.67% at 1.20808 USD/NZD.

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TAGS: American Dollar Forecasts Australian Dollar Forecasts Daily Currency Forecasts