Gains Forecast for Pound Sterling VS Australian Dollar, New Zealand Dollar

November 9, 2015 - Written by David Woodsmith

STORY LINK Gains Forecast for Pound Sterling VS Australian Dollar, New Zealand Dollar

US Labour Market Data to Provoke GBP/USD Conversion Rate Volatility this Week

Two major data releases from opposite ends of the world are forecast by analysts to trigger pronounced movement in the global currency markets during this week’s session.

Our leading currency market analyst takes a look at the likely fallout for some of the world’s major tenders below –

Friday’s US labour market data took on added significance following Federal Reserve Chair Janet Yellen’s assertion last week that a December interest rate hike remained a ‘live possibility’ from America’s rate-setters.

Economists had been anticipating another showing of well below the benchmark 200,000 figure from the Non-Farm job creation aspect of the data – the result of 271,000 versus an anticipated 185,000 from the October figure therefore sent investors into a tailspin.

Brian Jacobsen of Wells Fargo explained, ‘that was an astounding number. It's pretty clear that the Fed would be justified in hiking in December, if the economy doesn't hit another air pocket.’

Pound to US Dollar Exchange Rate Cooled Close to 1.5000 following Positive US Non-Farm Payrolls

As recently as two weeks ago, futures markets had been pricing-in only a 30% chance that US interest would increase before the end of 2015 – Friday’s local jobs data changed all that and by the second half of the final trading session of the week, the same futures markets were factoring-in a chance of almost 70% that Fed rate ‘lift-off’ will take place in December.

Meanwhile, in the global currency markets, the development sent the Pound Sterling US Dollar exchange rate tumbling to only just above its key level of support at the psychologically significant 1.5000 GBP USD threshold.

GBP Strengthens against AUD, NZD and CAD following US Jobs Data

Elsewhere, more tame data from China, published over the weekend shutdown, may cause investors to shun risk-laden assets as trading gets underway this week.

The upshot could see the Pound Sterling (currency : GBP) recoup some of its recent losses against the high-yielding Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and Canadian Dollar (currency : CAD). FX insiders forecast that yesterday’s weaker than anticipated Chinese import data, which pointed to a year-on-year drop-off of almost a fifth in the level of shipments out of the world’s second largest economy, could further drain risk appetite.

It was the twelfth month on the trot that Chinese exports have slumped and if, as appears likely, this triggers a renewed flight to safety, then expect investors to further shift out of the Commodity Dollars.

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TAGS: American Dollar Forecasts Pound Australian Dollar Forecasts Pound Ca Forecasts