The Pound Sterling to Euro (GBP/EUR) exchange rate climbed in Thursday’s European session while the Pound Sterling to Australian Dollar (GBP/AUD) sank on upbeat Australian Unemployment Rate and inflation data; the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate also declined.
Australia’s Consumer Inflation expectation recorded a rise from 3.2% to 3.4% in April, while Australian Employment Change came in at 37.7.K in March rather than the 15.0K forecast.
The jump in employment allowed the Unemployment Rate to dip down from 6.2% to 6.1% in March rather than climbing to the 6.3% forecast.
However, not all experts are as upbeat about the news after some unreliable data emerged last year.
Australian Labour Force data – employment growth just tracking population growth, unemployment barely dented, the weak situation continues
— Bill Mitchell (@billy_blog) April 16, 2015
The Pound Sterling to Euro (GBP/EUR) exchange rate recorded gains in Wednesday’s trading ahead of European Central Bank (ECB) announcements, while the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed and the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate slipped on account of Chinese data.
The New Zealand Dollar exchange rate advanced against a host of other majors after weaker-than-forecast Chinese data emerged. The figures boded particularly badly for the New Zealand Dollar’s close counterpart, the Australian Dollar.
Will the Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Reach Parity Tonight?
As both Australia and New Zealand’s largest trading partner is China, the nation’s ecostats can severely impact both the ‘Aussie’ and the ‘Kiwi’. The sink in Chinese Industrial Production from 7.9% to 5.6%, when economists had forecast a smaller fall to only 7.0% on the year in March, saw the Australian Dollar exchange rate drop as Australia’s largest export (iron ore) is likely to experience a slip in both demand and price.
The fall offered the New Zealand Dollar the opportunity to climb higher against the Australian Dollar, edging ever closer to historic levels of parity.
Westpac foreign exchange market strategist Imre Speizer commented: ‘Bad China data is always going to hurt the ‘Aussie’ more than ‘Kiwi’. We are within about a cent of parity now. If we don’t see parity tonight, it will be close to it.’
The New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate is currently trending in the region of 0.9911.
Furthermore, the latest fall in Chinese Gross Domestic Product (GDP) data from 7.4% to 7.0% on the year in March, coupled with extremely weak Trade Balance data at the start of the week, isn’t boding well for the Australian Dollar or New Zealand Dollar.
Spiezer continued: ‘It’s all adding up to more signs of a slowing economy.’
Meanwhile, the Euro is in for an exciting day amid ongoing Greek negotiations and European Central Bank announcements. The ECB is to announce its latest interest rate decision, followed by a press conference led by ECB chief Mario Draghi.
Any hawkish remarks by Draghi could lead to a Euro rally; it’s possible the central bank president will comment on the recently implemented QE programme which has already begun having a visible effect on the 19-nation currency bloc since beginning in March.
If the ECB chief announces the possibility of QE ending earlier than the currently forecast September 2016, investor sentiment in the Euro could climb dramatically.
Forex expert Ilya Spivak commented: ‘The Eurozone economy has shown some signs of life in recent months and the central bank chief will almost certainly have to field questions about the possibility that QE will be cut short if growth and inflation mend faster than expected.’
‘Rhetoric opening the door to such a possibility may be interpreted as a relative shift away from the ultra-dovish extreme on the policy outlook spectrum, boosting the Euro.’
Furthermore, the situation in Greece continues and the nation is becoming extremely close to running out of funds at a time when negotiations appear to be yielding little result.
— Mike Bird (@Birdyword) April 15, 2015
Pound Sterling to Australian Dollar (GBP/AUD), New Zealand Dollar (GBP/NZD) and Euro (GBP/EUR) Exchange Rate Forecast
The Pound is also extremely sensitive to central bank movements at the moment on top of political concerns as we approach the UK general election. The possibility of a messy vote, political shakeup and hung parliament are all factors pressuring the Pound Sterling exchange rate lower.
The UK economy is experiencing a quiet few days for domestic data releases but trading is expected to spice up on Friday with the release of the highly influential UK Unemployment Rate, Average Weekly Earnings and Employment Change ecostats.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is reaching 1.9610. The Pound Sterling to Australian Dollar (GBP/AUD exchange rate is trading at 1.9418; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3912.