The Pound to Australian Dollar (GBP/AUD) exchange rate softened on Wednesday morning after data showed that UK house prices declined more than forecast last month and as investors focused upon the upcoming Bank of England policy meeting.
According to figures released by mortgage lender Halifax, UK house prices declined unexpectedly in October and recorded the smallest quarterly increase for two years, adding to signs that the nation’s property market is slowing.
The report showed that house prices fell by -0.4% taking economists by surprise as they had been forecasting for a rise of 0.4%. September’s 0.6% rise was also revised downwards. On a quarterly basis house prices increased by 0.8%, the smallest increase recorded since 2012.
Concerns from homeowners regarding a possible interest rate increase next year are thought to have been one of the major factors cooling the property market.
‘Concerns over interest rates are likely to curb buying intentions,’ said Halifax housing economist, Martin Ellis.
Attempts by the Bank of England to lower risky mortgage approvals were also playing its part.
The number of new mortgages issued by lenders fell in September to its lowest since July 2013, according to figures from the Bank of England, partly due to tougher affordability requirements introduced by regulators in late April.
The Pound is likely to soften further ahead of the BoE policy-meeting outcome as investors are raising their bets that policy makers have strengthened their resolve on leaving interest rates unchanged. A slowing economy and weakness in Europe has caused traders to push back their expectations for a rate rise to occur in the latter part of 2015.
Further declines for Sterling were somewhat restrained however after data showed that Industrial production in the UK increased by 0.6%, beating economist expectations. Manufacturing production also increased more than expected.
GBP/AUD Exchange Rate Weakens Further
The Pound continued to decline against the Australian Dollar on Thursday afternoon as the Bank of England left interest rates unchanged at the record low level of 0.5% and maintained its monthly bond buying programme at £375 billion. No statement was issued with the rate decision but that did not stop economists speculating that policy makers have firmed their resolve to leave interest rates unchanged until the latter part of 2015.
The Australian Dollar received support after the European Central Bank left interest rates unchanged and said that its limited bond buying programme would likely last for two years. Investors turned to the ‘Aussie’ for its higher yields and interest rates.
GBP/AUD Exchange Rate Falls on RBA Comments
The Pound softened further against the Australian Dollar on Friday as the policy makers from the Reserve Bank of Australia (RBA) reaffirmed their commitment to maintaining the central banks accommodating monetary policy as the falling value of the Australian Dollar supports low interest rates. The markets ignored a weaker than forecast construction growth data.
Sterling is likely to soften further throughout the session as the latest balance of trade data is widely expected to show a widening of the UK’s trade deficit.
The ‘Aussie’ could go back on the back foot if data due out of the USA comes in strongly.
Trade data weighs on Pound
The GBP/AUD exchange rate tumbled by 0.58% on Friday as the latest UK trade data came in worse than forecast. The Australian Dollar meanwhile was benefiting from increased demand for higher yielding assets.
Disappointing data out of the USA allowed the ‘Aussie’ to rise at the expense of a number of major peers.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8615,
Australian Dollar,,Pound Sterling,0.5439 ,
Australian Dollar,,Euro,0.6935 ,
Australian Dollar,,New Zealand Dollar,1.1146 ,
US Dollar,, Australian Dollar ,1.1607 ,
Pound Sterling,, Australian Dollar ,1.8386 ,
Euro,, Australian Dollar ,1.4418 ,
New Zealand Dollar,, Australian Dollar ,0.8972 ,
[/table]
