Australian and NZ Dollar Forecasts Against the Pound (GBP) and US Dollar

Looking at the latest forex rates at the start of the new month, the British pound to Australian dollar exchange rate (GBP/AUD) is trading 0.04 pct higher at 1.8175.

The Australian to New Zealand dollar exchange rate (AUD/NZD) is trading 0.04 pct higher on a day-to-day basis having reached 1.0942.

The Aus to US dollar exchange rate (AUD/USD) is 0.12 pct higher at 0.9284.

Please note that these quotes are taken from the wholesale markets; your bank will affix a spread to the rate at their discretion. However, an independent FX provider will guarantee to undercut your bank's offer, thereby delivering up to 5% more currency in some instances. Find out more.

Australian and New Zealand currencies suffer

The sterling has advanced against both NZD and AUD by catching the tailcoats of the US dollar which is on a move higher right across the markets.

As expectations for interest rate rises in the US grow the yield advantage of economies like New Zealand and Australia diminishes.

Thus demand for their currencies wane. Expect more of the same in coming sessions.

"The dollar strengthened to fresh highs after data showed the U.S. economy returned to growth in style in April-June, expanding at a robust annual rate of 4 percent. That handily beat forecasts of 3 percent and offered evidence of more underlying muscle in the world’s biggest economy," says Joe Manimbo at Western Union.

If you are looking to lock in current rates in case of further declines ensure your currency provider has the correct stop-loss in place. If on the otherhand you are holding out for better rates ensure a buy order is in place, learn more here.

AUD vs NZD: Has the Australian dollar advanced too far against the NZ dollar?

The Aussie has enjoyed a strong run, alongside most major currencies, against a wounded Kiwi in recent sessions.

AUD/NZD has ticked higher over the past two weeks moving inline with 2y relative rate spreads, "this is mainly due to the paring back of RBNZ rate hike expectations. The weaker than expected Q2 NZ CPI and a dovish tone from the RBNZ at its rate meeting last week has prompted the market to price out some rate hikes which has seen NZ 2y yields lower," say Lloyds Bank Research in a currency brief to clients.

Furthermore, AUD/NZD is now seen near the top end of the 1.0500-1.1050 range that has held since the start of the year. We view further upside as limited from here.

However, questions are starting to be asked as to how much further the Aus dollar rally can run.

"While NZD performance may remain subdued in the near-term, we think significant AUD outperformance looks difficult with AUD positioning already sizeably long (IMM data); this also suggests it’s at most risk to USD strength. Furthermore there remains a risk that market rate pricing is perhaps too negative for NZ. We wait for the next Monetary Policy Report due for release in September for the RBNZ’s updated rate path projection," say Lloyds.

GBP vs NZD: Pound to NZ dollar

The New Zealand dollar has continued selling off against the GBP following weak inflation data earlier in the month.

Milk giant Fonterra lowered its forecast for payouts to farmer amid declines in global dairy prices and this has resulted in the New Zealand dollar dropping off further.

Nevertheless, the prospects for GBP/NZD remain uncertain at the present time notes Amin:

"With the RBNZ expected to keep rates unchanged for a prolonged period of time, we expect to see a shift in momentum in the GBP/NZD rate. Uncertainty has crept into the minds of sterling bulls following the latest monetary policy meeting minutes and therefore we should see some added volatility flood sterling markets in the near term. If and when the BoE set a time frame in which we could see policy tightened, we expect sterling to pull away from most of its G10 peers."

AUD, NZD vs the USD: Dollar Firmly on the Front-Foot

The U.S. dollar hovers near a six-month high against a basket of its major rivals overnight as investors braced for a very busy economic calendar week that is likely to set the tone for major currency pairs over the weeks to come.

A two-day Federal Reserve monetary policy meeting, the first look at U.S. second quarter GDP, euro zone inflation and unemployment figures and the all-important U.S. employment report for July are on tap this week.  

"Despite the marked improvement in U.S. growth, the Fed is unlikely to change its statement this month given the lack of wage growth and still benign inflation backdrop. However, even a slight nod to recent U.S. economic strength by the Fed and/or another strong payrolls report on Friday could finally see U.S. Treasury yields and the dollar break meaningfully higher," says Omer Esiner at Commonwealth Foreign Exchange.

Regarding the forecast for the AUD/NZD, Luc Luyet at Swissquote Research says:

"AUD/USD has weakened after its false breakout at 0.9457. Monitor the test of the support at 0.9380 (intraday low, see also the 61.8% retracement). An hourly resistance can be
found at 0.9425 (25/07/2014 high). A key support stands at 0.9319.

"In the longer term, prices are consolidating within the range defined by the key support at 0.9206 and the key resistance at 0.9461 (10/04/2014 high)/0.9505. A break of the support
at 0.9319 is needed to suggest significant exhaustion in the buying interest."