GBP AUD & GBP NZD Exchange Rate Forecasts: Losses Predicted For Pound Sterling to Australian & NZ Dollars

June 6, 2014 - Written by John Cameron

STORY LINK GBP AUD & GBP NZD Exchange Rate Forecasts: Losses Predicted For Pound Sterling to Australian & NZ Dollars

The European Central Bank’s dramatic efforts, announced yesterday lunchtime, to avert a decimating bout of deflation in the eurozone’s already fragile economy sent the Pound euro exchange rate up to a fresh 17-month high at 1.2400 GBP/EUR. The ECB’s revelation that it was trimming all three of its leading lending rates, with overnight deposits now attracting a negative rate of return, hit the single currency hard. ECB President Mario Draghi’s comments during his press conference which followed the announcement contained additional detail of preparations which his Bank was making to introduce its own version of Quantitative Easing.

The Pound to Australian Dollar exchange rate is positioned 0.08 per cent lower on the day at 1.80078 GBP/AUD. The Pound Sterling to New Zealand Dollar exchange rate is trading down 0.15 per cent at 1.97820 GBP/NZD.

The dramatic events were clearly viewed by investors as bad news for the euro, but they had a marked effect on the relative value of several of the other sixteen most-actively traded global currencies as market participants anticipated a ready flow of easy money from the ECB into the world financial system during coming months.

The improvement in global risk appetite was evidenced by movement for Frankfurt’s DAX equities index which climbed to a record high in the aftermath of Draghi’s words. The risk-sensitive Rand, considered by many analysts to be the most volatile of the global currencies, was struggling during the morning European equities session, with the Pound Sterling Rand exchange rate changing hands at above the psychologically key 18.0000 level in the lead-up to the ECB announcement. However, the pair slumped to as low as 17.7626 as Draghi spoke.

Australian & New Zealand Dollars gain off Euro zone actions

The Australian and New Zealand Dollars showed similar gains in response to the dovish actions from the eurozone’s central bank. GBP/AUD dropped from close to the 1.8100 level down to an intraday low of 1.7981 during the early part of the afternoon. Meanwhile, GBP/NZD also suffered, dropping from an intraday high of 1.9898 down to 1.9781during after-hours trading in London. The Commodity Dollars have the potential to record further gains during the remainder of the week as investors continue to price-in the ECB’s unprecedented actions.

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