Aus and NZ Dollar Exchange Rates vs Pound Sterling: NZD and AUD on the Front-Foot as GBP is Hit by Fresh Selling Interest

A look at the latest GBP crosses show:

• The British pound to Australian dollar exchange rate (GBP/AUD) is 0.1 pct down on last night's closing rate at 1.8116.
• The British pound to New Zealand dollar exchange rate is (GBP/NZD) is 0.18 pct lower at 1.9555.

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British pound to Australian dollar: AUD still expensive by historical standards

With improved data out of China, the Australian dollar has strengthened considerably against sterling so far this week.

However, "with the Australian dollar currently at historically high levels, it is likely that pressure will continue to build on the RBA to take monetary action sooner rather later to prevent there being a negative impact on exports, which remains one of the key components of the Australian economy," says Kamil Amin at Caxton FX.

Caxton tell us they expect there to be further sterling activity this week as the market continues to digest last week's policy minutes and weaker than expected data.

"With signs emerging that the BoE could hike rates by the end of the year, it is likely that there will be added importance on key economic indicators moving forward. With BoE Governor Carney speaking tomorrow, we could see further sterling strength emerge, especially if we continue to see signs of hawkish sentiment surfacing with regards to the central banks decision making," says Amin.

Pound Sterling vs New Zealand dollar (GBP/NZD)

Turning to the GBP to NZ dollar exchange rate, we see similar actions as those besetting other commodity-linked currencies.

NZD has strengthened against the pound sterling this week on the back of better than expected Chinese PMI data.

"With consumer confidence also showing signs of improvement, it is not surprising that we have seen the New Zealand dollar maintain a strong position against sterling. Continuous positive sentiment emerging from the UK has contributed significantly to the sterling upside and the uncertainty surrounding the situation in Iraq has continued weighing in on riskier currencies, but the New Zealand dollar has remained stable," says Amin.

Amin reckons that this week could be crucial in determining the outlook for the GBP/NZD pairing moving forward, with the release of growth figures out of the UK and trade balance data out of New Zealand.

"With growth remaining a key component of the BoE's forward guidance, we could see further sterling inflows if the figures exceed the level currently estimated, especially following the hawkish sentiment that emerged from last week's policy meeting minutes. With sterling appreciation remaining a hindrance to the economy, we expect the BoE to remain level headed in their approach to prevent any progress made thus far being dismantled," says Amin.

US dollar mixed at start of the week

Turning to the big dollar, it has been a slow start to the new week.

"We continue to view USD downside prospects as relatively limited against the majors and remain medium-term USD bulls.  But the lack of upside traction in the greenback is curbing our near-term enthusiasm for the currency," says Shaun Osborne at TD Securities.

Elsewhere, the Canadian dollar continues to tear higher.

"USDCAD was crushed by Friday’s stronger than expected Canadian retail sales and CPI data—falling to the lowest point seen since the start  of the year and below the 200-day MA.  We do not think the CPI data has any immediate implications for monetary policy as the BoC is likely to continue focusing on the transitory nature of the rise in headline inflation rates (due to base effects, the pass through from a weaker CAD and higher energy prices)," says Osborne.