Exchange Rates - Pound to Australian Dollar (GBP/AUD) & NZ Dollar Rate (NZD) Benefit From Weak Sterling

July 6, 2014 - Written by Ben Hughes

STORY LINK Exchange Rates - Pound to Australian Dollar (GBP/AUD) & NZ Dollar Rate (NZD) Benefit From Weak Sterling

On Tuesday the Pound to Australian Dollar (GBP/AUD) exchange rate and New Zealand Dollar (NZD) rate have seen losses of 0.49% and 0.75% respectively as the commodity dollars benefit from a weakened Sterling. The British currency softened versus a majority of the global forex rates as worse than forecast UK Industrial Production data weighed.

At the start of the week, The Australian Dollar (AUD) exchange rate remained above the 94 cents level against the US Dollar (USD) as it continued to benefit from a weakened ‘Greenback’. Against the Pound the currency was lower due to the release of downbeat domestic housing data.

On Tuesday the foreign exchange markets show the following levels:

- The australian dollar to euro exchange rate is 0.3 per cent higher at 0.69086.
- The australian dollar to pound exchange rate is 0.45 per cent higher at 0.54946.
- The australian dollar to dollar exchange rate is 0.28 per cent higher at 0.93974.

New home sales in Australia dropped 4.3% last month, after a 2.9% increase in April. The New Zealand Dollar (NZD) meanwhile softened against most of its major peers after an ANZ business confidence index for the country fell sharply from last month’s reading of 53.5 to 42.8. Building consents also dropped by 4.6%.

The Australian Dollar (AUD) Hits Best Exchange Rate in 7 months

On Tuesday the Australian Dollar exchange rate (AUD) advanced to its best level in seven months against the US Dollar (USD) after the Reserve Bank of Australia left interest rates unchanged. The currency also received support from an upbeat Chinese manufacturing report. The RBA left its benchmark interest rate unchanged at a record low 2.5%. With China being Australia’s biggest trading partner any positive news out of the Asian nation offers support to the ‘Aussie’.

The New Zealand Dollar (NZD) also managed to edge higher against a number of its major peers as the data out China supported the currency. China’s final HSBC Purchasing Managers Index came in at 50.7, weaker than a preliminary reading of 50.8 but higher than May's 49.4 figure. China is New Zealand’s second biggest export market.

Midweek the ‘Aussie’ went on the retreat from the eight-month high it had reached against the US Dollar. The decline came after the release of a worse-than-forecast trade balance data report. The data showed that Australia’s trade deficit widened to A$1.91 billion in May, much worse than the A$0.12 billion expected by economists.

New Zealand Dollar (NZD) Weakens Against Majors

The New Zealand Dollar followed its ‘Aussie’ relation downward by softening against several of its major peers as dairy prices fell to their lowest-levels in 18 months, raising concerns about the strength of the local economy. Fonterra’s Global Dairy Trade price index fell 4.9% to mark its ninth consecutive decline and was at its lowest level since January last year. Dairy goods are New Zealand’s biggest export so any fall in prices will likely have a negative impact upon the nation’s economy.

As the week was drawing to an end the ‘Aussie’ tumbled further against its major peers and fell to a one-week low against the US Dollar after Reserve Bank of Australia Governor Glenn Stevens said that the currency was overvalued. The currency was also weakened after a report showed that retail sales fell unexpectedly in May.

Addressing a conference of economists Stevens warned investors that the currency could drop sharply.

“Lest there be any uncertainty about this, let me be clear, again, that the exchange rate remains high by historical standards,” Mr Stevens told the conference. “When judged against current and likely future trends in the terms of trade, and Australia’s still high costs of production relative to those elsewhere in the world, most measurements would say it is overvalued, and not by just a few cents.”

The New Zealand Dollar softened again also as it remained under pressure from the previous day’s report which showed that dairy prices have fallen. A stronger than forecast jobs report out of the USA was also putting pressure upon the currency.

Aussie Recoups Losses vs US Dollar

As the week drew to a close the Australian Dollar rate clawed back some ground against the US Dollar as the US currency saw light trade due to the closure of the nation’s markets for the Independence Day holiday.

The New Zealand Dollar remained under pressure from the fall in dairy prices.

Aus & NZ Dollar Update 08/07/2014

Some upbeat economic reports for Australia helped the Australian Dollar advance on the Pound during the local session.

Although Australia’s Roy Morgan Weekly Consumer Confidence Index declined in the week ending July 6th (falling from 105.4 to 105.1) other domestic data impressed.

The National Australia Bank (NAB) Business Confidence and Business Conditions Indexes both showed improvement, with the former climbing from 7 to 8 in June and the latter rising from -1 to 2. Further GBP/AUD movement can be expected today.

Latest Australian Dollar & New Zealand Dollar Exchange Rates Today - Updated 08/07/2014

The Pound Sterling to Australian Dollar exchange rate is trading down -0.49% at 1.81928 GBP/AUD.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0.75% at 1.94386 GBP/NZD.
The Euro to Australian Dollar exchange rate is trading down -0.32% at 1.44728 EUR/AUD.
The Euro to New Zealand Dollar exchange rate is trading down -0.58% at 1.54638 EUR/NZD.
The US Dollar to Euro exchange rate is trading up +0.04% at 0.73524 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading up +0.21% at 0.58490 USD/GBP.

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