Dovish Comments by BoE Governor Sees Pound Down -1% Against Australian Dollar
Pound Sterling is once again suffering in the wake of dovish comments by members of the Bank of England’s (BoE) Monetary Policy Committee (MPC). Governor Mark Carney has dashed hopes of a significant rate hike and Chief Economist Andy Haldane believes that interest rates may even need to fall.
The Australian Dollar benefitted from trader caution as investors paused ahead of today’s key US data releases. Despite positive US economic news, the US Dollar hasn’t seen much movement, leaving the ‘Aussie’ free to continue gaining on the major currencies.
The GBP/AUD exchange rate is down more than -1% to trade around 2.0839.
Earlier…
After riding high on the back of a weak US Dollar and positive jobs data, the Australian Dollar has finally run out of momentum. Despite poor UK borrowing figures, Pound Sterling has gained 0.8% on the ‘Aussie’ today.
GBP/AUD Exchange Rate: Australian Dollar Tumble Sees Pound Escape Losses
Poor UK public borrowing figures haven’t been enough to dampen Pound Sterling as investors begin to desert the high-risk Australian Dollar following a massive upwards charge which started on Wednesday.
While Chancellor George Osbourne is still on track to reduce borrowing compared to the previous year, a £4 billion deficit in public finances makes it unlikely that the target figure of £69.5 billion will be met. The Chancellor is expected to announce more cuts in the Autumn Statement next week in order to try and get spending back on track. Last year the UK borrowed £90.1 billion and experts are predicting this year’s spending cuts will see that figure drop to around £80.3 billion – significantly higher than originally forecast.
While the figures are bad news for the Chancellor’s plans, they still show that the UK is moving in the right direction. David Kern, economist at the British Chambers of Commerce, is still positive, stating: ‘This financial year so far the government is making progress in cutting the deficit, and there is still a realistic chance that they will achieve the target set in the July budget.’
The GBP/AUD exchange rate is currently trending up 0.8%.
AUD/GBP Exchange Rate Plummets as US Dollar (USD) Regains Strength
With the US Dollar trending up after days of trader profit taking and weak demand, the ‘Aussie’ has run out of steam. Traders are now profiting on the strong high-risk asset in order to turn back to the safe-haven ‘Buck’. As a result the Australian Dollar has plummeted against all the major currencies apart from the New Zealand Dollar (NZD).
The fall comes after warnings from economist Yanis Varoufakis, former finance minister of Greece, who has dual Greek and Australian citizenship, over the perceived immunity of the Australian economy from further global crisis. The ‘Aussie’ has benefitted from unfaltering Reserve Bank of Australia optimism and positive economic data, but Varoufakis recently claimed that Australia is a ‘plaything of forces out of its control’.
The AUD/GBP exchange rate is trending down between 0.4739 and 0.4758.
GBP/AUD Exchange Rate Forecast: Busy Week of US Data Likely to Push Australian Dollar Down
The plummeting ‘Aussie’ could see further losses in a week empty of important Australian data. US data today could help cushion the fall of the Australian Dollar as both the Markit Manufacturing PMI and the Existing Home Sales for October are expected to post lower than the previous figures. However, the US annualized GDP tomorrow is expected to show a rise from 1.5% to 2.1%, while Personal Consumption is expected to hold steady at 3.2%. The Consumer Confidence index for November is expected to rise to 99.5.
The economic calendar is also dominated by US data on Wednesday, with a number of high impact data releases likely to cause another massive ‘Aussie’ slump if the majority of positive forecasts are met.
It is not until Friday that UK data is likely to affect the GBP/AUD exchange rate, with Gross Domestic Product expected to remain steady at 2.3%.
The GBP/AUD exchange rate is currently trending between 2.1010 and 2.1173.
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