GBP AUD Exchange Rate Heads Higher, GBP NZD Rate Falls Back

June 10, 2013 - Written by Frank Davies

STORY LINK GBP AUD Exchange Rate Heads Higher, GBP NZD Rate Falls Back

Saturday’s Chinese trade data for May has had a markedly different effect on the Antipodean Dollars. Ordinarily, analysts would expect the high-yielding Australian and New Zealand Dollars to behave in a broadly similar fashion to the import/export numbers from the world’s second largest economy. The Chinese figures showed a significantly lower than anticipated level of both inward shipments and outward shipments in the giant Asian economy.

Today’s session has brought an unexpected response from market participants to the development, with the New Zealand Dollar registering healthy gains on the day against Sterling, sending the GBP NZD exchange rate lower to 1.9649. The pair had briefly traded above the 1.9800 level earlier on. The level of support for the Kiwi Dollar was unexpected due to the New Zealand economy’s heavy dependence on a strong level of demand from its number one export market – China. The move in favour of the NZD today would therefore appear to be attributable to factors other than the Chinese numbers. The most likely driver behind the move seems to be technical – GBP NZD has gained over 20c in a very short space of time and the pair would now appear to be over-extended, particularly given that the Reserve Bank of New Zealand Governor Graeme Wheeler has revealed that his Bank committed a mere NZD256m to its recent currency market intervention aimed at weakening the Kiwi.

The Australian Dollar’s response to the Chinese numbers was closer to what analysts were expecting. The Pound to Australian Dollar exchange rate (currency : GBP AUD) has gained over half a percentage point on the day and is currently trading at 1.6442. The Aussie’s reaction indicates that there may be more upside to come for the pair in coming sessions. In such a scenario, the next level to watch for to the upside comes at 1.7000.

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TAGS: Australian Dollar Forecasts Daily Currency Updates New Zea Forecasts