GBP AUD & GBP NZD Exchange Rates Drop

June 13, 2013 - Written by John Cameron

STORY LINK GBP AUD & GBP NZD Exchange Rates Drop

Last night’s Asian session brought considerable volatility for the Anipodean Dollars following key risk events in both Australia and New Zealand and a potentially game-changing announcement from the World Bank regarding the future prospects of the Chinese economy.

As expected, the Reserve Bank of New Zealand announced in the early hours of this morning that it was leaving its Official Cash Rate at 2.50%. However, it was the content of the accompanying statement which shifted the relative value of the Kiwi. RBNZ Governor Graeme Wheeler used the statement to air his concerns that the domestic housing market was showing signs of overheating in certain corners of New Zealand, including the nation’s largest city – Auckland and in Christchurch – making any near-term interest rate cut a remote possibility.

The New Zealand Dollar improved following the RBNZ’s commentary, however the Kiwi had come under severe pressure earlier in the overnight session following an announcement from the World Bank that it was downgrading its 2013 GDP growth forecast for the Chinese economy. The Kiwi suffered as a consequence due to the fact that China is New Zealand’s number one export market. The move against the NZD caused the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) shoot up to as high as 1.9863. However, Wheeler’s hawkish comments which followed the RBNZ’s rate decision ensured that GBP NZD ended the Asian session on a firmer footing to trade back down into the middle part of the 1.9600s once more.

The Australian Dollar enjoyed a positive overnight trading session in spite of the World Bank’s commentary on China’s economy, sending the GBP AUD exchange rate down to 1.6458 earlier. The Aussie was supported by a firmer than anticipated set of domestic labour market figures which showed that the overall level of unemployment in Australia had unexpectedly dropped to 5.5% last month. However, the near-term support for the Aussie may prove to be short-lived as investors continue to fret about the high likelihood of further interest rate cuts from the Reserve Bank of Australia as 2013 progresses.

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TAGS: Australian Dollar Forecasts Daily Currency Updates New Zea Forecasts