Pound Sterling Forecast vs AUD NZD Declines on Dovish Fed Speech and Poor US Claims Figures, as well as steel crisis

March 30, 2016 - Written by John Cameron

STORY LINK Pound Sterling Forecast vs AUD NZD Declines on Dovish Fed Speech and Poor US Claims Figures, as well as steel crisis

The Pound has closed the week on a low note, due to steel production remaining in a state of severe uncertainty this week.

Sterling losses against the AUD and NZD have been exacerbated today by the United States claims data, which has failed to show any major reductions in the number of citizens involved in benefits.

The Pound has lost out against both the Australian Dollar and the New Zealand Dollar today, owing to the falling chances of a US interest rate hike in the future.

Commodity Price Gains Forecast to Peter Out Led by Crude Oil Price Declines

Commentary and movement in the global markets during the past 24hrs have led analysts to tentatively forecast that the recent rally in world commodity prices may be on the verge of petering out. The closely-monitored Bloomberg Commodity Index, which traded up to as high as 81.23 as recently as 22nd of March, is currently barely holding above the 79.00 threshold and the price of a barrel of Brent Crude Oil, which had been tipping the scales at well over $40, is now back at $39.

Kevin Norrish of Barclays PLC issued a doom-laden report detailing the perilous current position for raw material prices yesterday. Norrish noted that, ‘investors have been attracted to commodities as one of the best performing assets so far in 2016’, before going on to warn that, ‘in the absence of any concerted fundamental improvements, those returns are unlikely to be repeated in the second quarter, making commodities vulnerable to a wave of investor liquidation.’

As a benchmark, he went on to predict that the wholesale market price of copper could fall from its current level of close to $5,000 per metric ton, down to the $4,000 threshold. Meanwhile, he feels that the price of a barrel of crude oil could peel back into the low $30s.

GBP/AUD Exchange Rate Forecast to Improve on Commodity Price Drop

If this downbeat forecast comes to pass, then FX insiders forecast that the Pound Sterling (currency : GBP) could sharply improve against the Australian Dollar (currency : AUD). Australia’s number one export remains iron ore, so a widespread sell-off for metals would hit the local economy extremely hard. If investors do turn against commodities, then expect the Pound Sterling Australian Dollar exchange rate to spike back above the two to one level.

Similarly, the New Zealand economy is driven by shipments of raw materials to foreign markets. A dip in the price of metals is likely to be accompanied in a fall in the selling price of soft commodities including Whole Milk Powder – New Zealand’s number one export. Such a development is expected to send the Pound Kiwi Dollar exchange rate sharply higher.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts New Zealand Dollar Forecasts Pound Austr Forecasts