Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate News: Forecast Gains Don’t Occur after CPI

The British Pound to Australian Dollar (GBP/AUD) exchange rate began the week little changed as an absence of particularly influential economic news from either the UK or Australia restrained movement.

Some Sterling softening did occur in response to a report outlining a decline in UK house prices.

Data compiled by Rightmove showed that UK property prices fell by 0.8% in July following an increase of 0.1% the previous month.

On the year prices were up by 6.5%, considerably lower than the annual increase of 7.7% recorded in June.

The overheating housing sector has been a major concern among Bank of England policy makers for some time and has had an impact on fiscal policy.

In fact, concerns regarding the housing sector are largely driving interest rate hike speculation, so signs that the property market might be cooling (which would reduce the necessity for a rate hike taking place this year) could wear on the Pound.

The Pound to Australian Dollar exchange rate dropped to a low of 1.8179 after the report was published but later recovered ground.

The US Dollar to Australian Dollar (USD/AUD) exchange rate began the week trending in the region of 1.0653.

Rightmove Director Miles Shipside said this of the data; ‘Market conditions still compare favourably with this time last year, with growth in both the economy and employment, plus a comparative thaw in mortgage availability.’

The Australian Dollar, meanwhile, was holding steady ahead of this week’s major domestic news.

Last week the South Pacific currency fluctuated against its peers as a result of the Reserve Bank of Australia’s meeting minutes and China’s growth figures.

The tragic Malaysian plane crash also had an impact on risk appetite last week, which in turn caused Australian Dollar movement. However, although the world is still demanding answers as to why the plane was brought down, the event is no longer influencing market sentiment.

As observed by currency strategist Sean Callow; ‘Certainly people were shocked when the plane was first shot down, and we saw a pretty dramatic reaction in global markets. Since then, while markets see this is a huge geopolitical event and human tragedy, they do not perceive it as a pivotal economic event.’

This week Australian Dollar volatility could be occasioned by RBA Governor Glenn Stevens. The central bank chief is scheduled to deliver a speech in Sydney on Tuesday.

Previously, Stevens has been pretty damning in his assessment of the Australian Dollar’s strength.

If he attempts to talk down the Australian Dollar this week we forecast that the Pound to Australian Dollar (GBP/AUD) exchange rate could slide ahead of the publication of Australia’s Consumer Price Index on Wednesday.

Other factors which may have an impact on the GBP/AUD exchange rate in the week ahead include the UK’s retail sales and growth figures and the release of minutes from the Bank of England’s last policy meeting.

UPDATED 10:20 GMT 22 July 2014

Pound to Australian Dollar Trending Lower

On Tuesday the Pound to Australian Dollar (GBP/AUD) exchange rate slid as investors responded to comments issued by Reserve Bank of Australia Governor Glenn Stevens.

During a speech in Sydney Steven’s intimated that while he’s comfortable with the current level of stimulus being deployed, he is willing to take further steps if needed.

Sterling shed 0.25% against the Australian Dollar overnight.

Movement in the GBP/AUD pairing also occurred in response to the UK’s public finance figures.

However, investors are also looking ahead to the soon-to-be-released Australian inflation data.

The Consumer Price Index for the second quarter is expected to show a 0.5% quarter-on-quarter increase and a 3.0% annual increase.

A surprising result could impact the Pound to Australian Dollar (GBP/AUD) exchange rate.

UPDATED 10:30 GMT 24 July 2014