Losses for GBP AUD and GBP NZD Exchange Rates Forecast to be Ephemeral

Published: Wednesday, 9 September 2015 17:00 BST - Written by John Cameron

STORY LINK Losses for GBP AUD and GBP NZD Exchange Rates Forecast to be Ephemeral

Forex NEWSFLASH: Japanese Share Index Climbs, Triggers Foreign Currency Exchange Movement

Japan’s leading share index, the Nikkei 225, soared by almost 8.0% during last night’s Asian session as dual policy announcements from the Far East helped fuel a sharp improvement in investor sentiment. The gain of 7.7% on the night was the Nikkei’s largest intraday gain since 2008 and followed Tuesday’s slump which saw Japan’s leading shares erase all of the gains which they have accrued since the start of the year.

Each of Japan’s 225 most valuable companies, as judged by market capitalisation, registered gains on the day, following a pledge from the nation’s Prime Minister Shinzo Abe to trim the current rate of Corporation Tax from 35.0% down to 31.7%. Abe also announced that it is his aspiration to continue cutting the tax on Japanese company profits down below the 30% threshold. The positive investor sentiment on the day was added to by an official statement from China’s Ministry of Finance promising to implement ‘fiscal measures to support growth’.

Pound Sterling to Japanese Yen Alert: GBP/JPY Trading at 185.9000

The official missive went on to suggest that, ‘We will accelerate the implementation and improvement of proactive fiscal policy and related measures, do timely fine tuning, and speed up reform measures to support stable growth and promote continued healthy economic development.’

The prospect of a Keynesian-style pump-prime for China’s apparently ailing economy also favoured stock markets in Europe and the US, with London’s FTSE 100 trading up by almost 2.0% just before the market close, while New York’s Dow Jones also traded into the green.

Pound Sterling to Australian Dollar (GBP/AUD) Falls from Six-Year Best Rate

On the currency markets, the Pound Sterling (currency : GBP) has lost ground against the high-yielding export-driven Australian Dollar (currency : AUD) and New Zealand Dollar (currency : NZD), with GBP AUD and GBP NZD dropping to intraday lows of 2.1757 and 2.3931 respectively. However, analysts were queueing up to forecast that these losses for GBP AUD and GBP NZD could prove short-lived – if, as expected, the Reserve Bank of New Zealand (RBNZ) trims its Official Cash Rate (OCR) from 3.00% down to 2.75% tonight, then both Antipodean tenders are predicted to suffer fresh losses.

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