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NZD Enjoys Gains Thanks to Strong GDP Figures

The mood of the market means that both JPY and USD have been under pressure. However, the NZD enjoyed strong gains due to an unexpected growth in gross domestic product figures.

NZD Enjoys Gains Thanks to Strong GDP Figures

GDP is the official measure of economic growth in New Zealand and is used to manage the New Zealand economy.

GDP increased by 1% quarter on quarter during the June period, which is higher than the 0.5% seen in the first quarter, as well as being ahead of a median forecast of 0.7%.

Short coverings were another contributing factor to the performance of both NZD and AUD, despite consumer confidence being its lowest in six years.

However, should the gross domestic product numbers stay strong, then both currencies may be able to build some foundations in the market moving forward.

AUD Also Enjoys a Lift

Much like NZD, AUD has seen an injection of confidence thanks to the positive mood currently doing the rounds.

The Reserve Bank of Australia (RBA) has announced that there could be risk moving forwards, given the latest trade tensions between the US and China, which could contribute toward a higher interest rate in the future.

The ongoing talks are thought to be a “material risk” when looking at the global economic forecast.

Unemployment Expected to Decrease Gradually

Despite trade tensions, it is forecast that unemployment will decrease by 5% gradually, while the wage gap is expected to increase as space within the labour market is made use of.

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Lows Expected Moving Forward Despite Recent Highs

Although the recent trade negotiations have helped rally both the NZD and AUD, it is forecasted that lows could be expected due to new concerns. This is due to China postposing its trade negotiations with the US until after the mid-term elections.

Another contributing factor will be the upcoming Federal Open Market Committee meeting, which will take place on Wednesday 26th September

Brexit had an overbearing impact on the GBP/USD pairing, seeing a drop of 90 points-in-percentage following the announcement British Prime Minister Theresa May was to refuse custom checks that the EU are keen to instil.

Although May’s plans are leaning towards a “soft” Brexit, it would appear that the EU are keen to ensure that the United Kingdom’s exit from the European Union is final.

One of May’s arguments is that the border effectively lies in the sea, while the EU have stated that checkpoints don’t necessarily have to be situated on the border thanks to the advancements of technology.

Exchange rates of the USD were also affected as there is still no agreement in place when it comes to trading between China and the US. The pound sterling forecast will rely heavily on any talks that develop in relation to Brexit moving forward.

Given that each day must now be used for discussions, it shouldn’t be long before currency news is able to garner a better idea of where the talks are heading.

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However, strong retail sales have helped tipped the balance somewhat, so while the pound sterling forecast is a fragile position, it is showing some resilience which could keep the mood of the market positive.

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