AUD and NZD Exchange Rates Fall Versus GBP, USD on Brexit and Trump Stance

28 April 2017 by News Desk   |   SHARE  

The Australian and New Zealand dollars have hit seven and nine-month lows versus the pound this week as commodity currencies took a hit due to risk-aversion, heightening geo-political tensions, and Brexit developments, say industry experts FC Exchange.

AUD/GBP and NZD/GBP Exchange Rates Sink on Brexit Deal Possibility

Brexit has hindered sterling strength since the EU referendum last June, but investors are beginning to back the pound with renewed confidence inspired by the upcoming snap election and possibility of a post-Brexit deal with the EU.

Cecilia Malstrom, the EU’s Commissioner for Trade stated this week that the EU and the UK would reach a trade deal ‘for sure’ which inspired investors to buy back the pound. UK Prime Minister Theresa May had previously stated ‘no deal for Britain is better than a bad deal’, but it appears hope for a free trade deal isn’t in short supply in the market.

Malstrom said: ‘It’s uncharted territory but I’m sure we will solve it. We will have a free trade agreement, that is for sure.’

UK Retail Sales Jump Quelling Brexit Consumer-Led Slowdown Fears

Thursday saw the latest UK Confederation of British Industry (CBI) retail sales number hit the market, coming in at a healthy 38 in April from the previous reading of 9. The figure marked the biggest increase in volumes in almost two years and allowed the pound some buoyancy in the market.

On a slightly less positive note, Friday’s European session saw the release of the UK GfK consumer confidence survey which retreated lower to -7 in April following last month’s -6 reading.

Additionally, the annual UK gross domestic product (GDP) number failed to fall in line with forecasts, but still registered growth, climbing from 1.9% to 2.1% in the first quarter of 2017 year-on-year. Quarter-on-quarter the ecostat was less positive, coming in at 0.3% in Q1 following Q4’s 0.7% reading. Economists had expected a softer slowing to 0.4%.

Risk-Aversion Pressures Aussie and Kiwi Dollar Lower

The Australian and New Zealand dollars have found their popularity waning recently as geo-political tensions mount. The prospect of military action in Korea is a factor that’s weighed heavily on the commodity currencies.

President Trump also dented the antipodean dollars with regards to the US’s trade protectionist attitude.

Westpac’s Imre Speizer commented: ‘Commodity currencies were again under pressure, coinciding with the Trump Administration’s latest attack on imports — aluminum. AUD made a fresh four-month low of 0.7440 before rebounding to 0.7470 in New York. The US administration’s trade protectionist policies are weighing.’

A host of US economic data is expected to make its way onto the market during Stateside trading on Friday; any negative figures would be likely to pressure the US dollar lower.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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