The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rallied from earlier losses to trade in the region of 1.85 as iron ore prices continued to decline and the recent weakening of the US Dollar was deemed as overdone by economists.
Falling iron ore prices and tumbling oil prices also weighed upon sentiment towards riskier commodity and emerging market assets like the ‘Aussie’.
Earlier the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate briefly fell to its lowest level since November 2014 on Monday as expectations that the Bank of England (BoE) will not hike interest rates until 2016 weighed.
Australian Dollar Exchange Rate Firms against US Dollar (USD)
Against the US Dollar, the ‘Aussie’ jumped to its best level in a month to rally back up to 82 cents. The rise was short-lived however, as the AUD/USD exchange rate then slipped back into the 81 cents range. The Australian currency was supported against the ‘Greenback’ after last week’s US jobs data showed a decline in wages and as speculation increased that the Federal Reserve will not hike interest rates until April at the earliest.
‘The headline numbers in the US employment reports were strong; however, a soft result in wage growth attracted the most focus. This outcome will fuel the debate on whether the Fed will trust the usual relationship between falling unemployment and rising wages to eventually bear fruit or sit on its hands until its sees some real wage pressures,’ said National Australia Bank.
The ‘Aussie’ received support from data released by ANZ which showed that job advertisements in the Oceanic nation increased by 1.8% in December to mark a seventh straight monthly gain.
The figure suggests that the nation’s labour market is continuing to do well despite the economic slowdown forecast.
A separate report showed that home loans in Australia slipped 0.7% in November, disappointing expectations for an increase of 2.0%. October’s figure was revised to a 0.2% rise from a previously estimated 0.3% gain.
Pound Sterling to Australian Dollar Exchange Rate Forecast
The GBP/AUD exchange rate is likely to regain ground later in the session if the latest Lloyds compiled Employment Confidence report comes in positively.
Following that data release, we can expect the currency pair to trade in a narrow range due to a lack of market moving economic data releases.
