Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Softens Overnight
The Pound Sterling to Australian Dollar posted a modest decline during the Australasian session as investors adjusted their positions before the weekend.
Although the falling price of iron ore continues to weigh on the ‘Aussie’, and China’s Manufacturing PMI fell short this week, the currency also posted a small gain against the US Dollar.
With influential global economic news in short supply, investors are forecasting limited GBP/AUD movement today.
That being said, the UK’s public borrowing data could have a slight impact.
Earlier…
GBP/AUD Exchange Rate Steady before Retail Sales
Prior to the publication of the UK’s retail sales data, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in a narrow range.
The Pound had previously advanced on the back of the Bank of England’s meeting minutes, which proved to be less dovish than anticipated.
If today’s retail sales figures show an increase it could push the Pound higher.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Gains after FOMC Minutes
The US Dollar to Australian Dollar (USD/AUD) exchange rate climbed overnight as investors responded to the FOMC meeting minutes.
While the minutes weren’t particularly hawkish, they did reveal that the Fed reached its decision to end quantitative easing easily. There was also the addition of some extra comments regarding the importance of economic data in dictating the speed of interest rate increases.
The Australian Dollar also came under pressure as China’s HSBC Manufacturing PMI fell by more than expected.
Earlier…
GBP/AUD Exchange Rate Extends Gains after BoE Minutes
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate pushed higher still as the European session progressed, taking its advance to over 1.0%.
Sterling strengthened across the board following the publication of the Bank of England’s (BoE) meeting minutes.
The minutes showed division among policy makers regarding the timeline for increasing interest rates and revealed that some Monetary Policy Committee members see inflation risks.
According to industry expert Neil Jones; ‘Investors are reducing short-Sterling positions on the BoE minutes. There was an expectation of greater dovishness and a possible return to an 8-1 split.’
On the subject of inflation, the BoE stated; ‘While Sterling’s appreciation was no doubt playing a part in holding inflation below the target – and would probably continue to do so – there was not yet evidence to suggest that the effect would be any different than had been supposed at the time the Committee had assessed the outlook in its August Inflation Report.’
The central bank also insinuated that some policymakers believe inflationary pressures could build as the level of spare capacity in the UK economy is eroded.
The GBP/AUD exchange rate achieved a high of 1.8160.
The US Dollar to Australian Dollar (USD/AUD) exchange rate continued to trend in a stronger position during the North American session as the US published a mixed bag of housing figures. Although housing starts fell short of forecasts, building permits data exceeded expectations.
Earlier…
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Sheds 0.6% before BoE Minutes
Although the Pound was generally softer in the wake of the UK’s inflation data, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate strengthened during the South Pacific session.
The GBP/AUD exchange rate was little-changed after Australia’s Westpac Leading Index for October came in at 0.0% on the month following the -0.1% decline recorded in September.
China’s MNI November Business Indicator also increased from 51.7 to 55.2.
However, demand for higher-risk assets like the Australian Dollar was seriously undermined by developments in Japan.
It recently emerged that Japan fell into recession in the third quarter of the year, and since then Prime Minister Shinzo Abe has delayed a scheduled sales-tax increase and called a snap election.
The uncertainty drove investors away from less stable assets and towards more reliable currencies like the US Dollar.
According to forex expert Shinji Kureda; ‘The Yen’s weakening trend remains intact. Should Abe’s coalition fail to retain a majority in the election, that would damp Dollar-Yen’s ascent, but the government should be able to clear such an easy challenge.’
The US Dollar to Yen (USD/JPY) exchange rate was trending in the region of a seven-year low.
Further Pound Sterling to Australian Dollar exchange rate movement could occur today following the publication of the minutes from the latest Bank of England policy meeting.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Gains 0.8% as Japan Calls Snap Election
The USD/AUD exchange rate had previously softened in response to the Reserve Bank of Australia’s (RBA) policy meeting minutes.
In the minutes the central bank asserted that it will be leaving interest rates on hold for the foreseeable future.
In the view of industry expert Stephen Innes; ‘Yesterday, the RBA released its monetary policy meeting minutes and it flagged both the Bank of Japan’s easing measures, and the GPIF reduction in target allocation for domestic bonds. The RBA expects such flows could hold the Australian Dollar at a higher level than economic fundamentals would imply. Basically, if the carry trade keeps the AUD strong, there may be a lower monetary policy trajectory.’
However, the Australian Dollar has since lost over 0.8% against its US counterpart.
If the minutes from the latest Federal Open Market Committee policy meeting (due out later today) are hawkish in tone, the US Dollar to Australian Dollar (USD/AUD) exchange rate could extend gains.
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,0.8665,
Australian Dollar,,Euro,0.6896,
Australian Dollar,,Pound,0.5544,
Australian Dollar,,New Zealand Dollar,1.1006,
US Dollar,,Australian Dollar,1.1557,
Euro,,Australian Dollar,1.4495,
Pound Sterling,,Australian Dollar,1.8039,
New Zealand Dollar,,Australian Dollar,0.9079,
[/table]
