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Pound (GBP) Slumps, New Zealand Dollar (NZD) Climbing, Rand (ZAR) Awaiting Current Account

Published: 8 Sep at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Italy, South Africa,

Pound (GBP)

The Pound (GBP) is trading amid anticipation of the Scottish Referendum results scheduled to take place on September 18th in which Scottish residents will vote for independence from the UK. With the latest YouGov poll suggesting 51% of Scots are in favour of independence, the Pound has tumbled in a rapidly against other majors. If Scotland decides to permanently leave the UK, Sterling could drop by up to 10% in the market against other majors. Scottish Secretary Jim Murphy has stated: ‘It is clear now that every vote is going to count.’

Euro (EUR)

The Euro (EUR) is presently trending at 0.8000 versus the Pound (GBP) as Sterling loses strength against other majors in the run up of the Scottish vote for independence. The Eurozone however has seen the Governor for the Bank of Italy Ignazio Visco state his views on the latest European Central Bank’s monetary policy suggesting that further measures must be prepared as a contingency. Visco commented: ‘As the launch of a new programme of covered bond purchases shows, we much not hesitate to take other actions, if they are necessary to guarantee monetary stability.’

US Dollar (USD)

The US Dollar (USD) is presently trading higher against the Pound (GBP) at 0.6184, whilst also trending in the region of 0.7727 versus the Euro (EUR). The Federal Reserve is due to hold their Federal Open Market Committee meeting for September in 10 days which could possibly see new wording for their approach to monetary policy. One topic up for clarification is a phrase previously used by the Federal Reserve stating that interest rates will remain low for a ‘considerable time’, which leaves the timeframe ambiguous.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) has been tapering ever so slightly lower against the US Dollar (USD) in the latter two days, currently reaching 0.9182 in the CAD/USD exchange rate. In an otherwise quiet week by way of domestic data, Tuesday will see the release of Canadian Housing Starts figures followed by the Canadian New Housing Price Index on Thursday which could encourage the ‘Loonie’ higher.

Australian Dollar (AUD)

The Australian Dollar (AUD) has reached highs against the Pound (GBP) on Monday as the vote for Scottish independence has shaken faith in Sterling. The ‘Aussie’ has seen stability from its largest trading partner China, with the release of positive Chinese data on Monday. Figures exceeding expectations included the Chinese Trade Balance which reached $49.83B in August, far higher than the $40.00B economists had predicted. The Australian Dollar is presently trading at 0.9354 against the US Dollar (USD) whilst also trending at 0.5781 versus the Pound.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) is gaining against its Australian Dollar (AUD) and US Dollar (USD) counterparts on Monday, after the US produced weaker than expected jobs data on Friday. Industry expert Kathy Lien stated: ‘While the Dollar could experience a further correction in the coming week, we expect the decline to be shallow and short-lived as investors view it as an opportunity to buy at lower levels.’ The New Zealand Dollar has appeared more desirable for investors seeking long term yields, with attractive interest rates. The ‘Kiwi’ is trading in the region of 0.8888 versus the Australian Dollar, whilst also reaching highs of 0.8329 against the US Dollar.

South African Rand (ZAR)

The South African Rand (ZAR) is softening against the US Dollar (USD) on Monday ahead of the release of significant South African current account figures on Tuesday. The Rand is likely to depreciate against other majors if the current account deficit widens more than anticipated, with one Reuters poll suggesting a 5.45% gap forecast to widen. Trader Warrick Butler suggested: ‘Should it come out north of our expectations then the Dollar will continue to grind out value against the Rand. I would use this as a possible entry point to get into longer term long Rand position as it feels like the world has priced in too much movement in global interest rates for the remainder of the year.’ The USD to ZAR exchange rate is presently attaining 10.7603.
As of Monday, 8th September 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2479, GBP USD exchange rate was 1.6095, GBP AUD exchange rate was 1.7347, GBP NZD exchange rate was 1.945, GBP CAD exchange rate was 1.7669, GBP CNY exchange rate was 9.883, and GBP ZAR exchange rate was 17.4027.
Dominic Lee About Author: (356 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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