The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate strengthened on Wednesday as investors focus on the evenings US Federal Reserve policy statement and as UK data came in below forecasts.
Riskier and commodity based currencies advanced on Wednesday as sentiment towards the US Dollar remained shaky ahead of the Federal Reserve’s eagerly anticipated policy statement due in the evening.
The Australian Dollar strengthened as investors raised their bets that the US Central Bank will deliver a dovish statement as concerns over the slowing European and Chinese economies persist. Policy makers are expected to leave interest rates unchanged with some economists speculating that a rate rise will not occur until the latter half of 2015.
The statement is also expected to show that the Fed has ended its monthly quantitative easing programme.
‘The end of QE is all but certain, but the question is how the Fed views the mixed economic data released over the past few weeks. If the statement retains the phrase that interest rates will stay low for a ‘considerable time’, the immediate reaction will be to sell the US Dollar,’ said a trader from Union Bank NA.
The Pound meanwhile was weakened against many of its peers after domestic data showed that the number of mortgages approved in the UK fell to the lowest level since July 2013 in September. The data adds to evidence that the rebound in UK’s housing market has waned.
According to the Bank of England (BoE) the number of mortgages approved fell to 61,627 in September, a drop from the 64,054 recorded in August. The fall was larger than economists had been forecasting.
Also adding to signs that the UK housing market is slowing was a separate report, which showed that the amount of mortgage lending increased by £1.8 billion in September, down from the rise of £2.2 billion in the previous month and was less than economist expectations.
Australian Dollar to Pound Sterling Exchange Rate Forecast
The Australian Dollar is forecast to remain higher against the Pound and other peers, as the Federal Reserve is highly likely to deliver a dovish statement. A slowing global economy and mixed data releases out of the US have almost certainly caused policy makers to hesitate in their optimism over the US economy.
The ‘Aussie’ could make further gains on Thursday if the latest Australian domestic data comes in positively. The UK house price data also due for release is likely to come in below previous readings as the nation’s housing market slows.
UPDATE
The Australian Dollar to Pound Sterling exchange rate is currently trending in the region of 0.5496.
Although the Federal Reserve acted positively in their most recent policy meeting, in so much as they ended quantitative easing, the fact that they have continued to use language such as ‘considerable time’ (when describing the timing of a rate hike) has enabled the ‘Aussie’ (AUD) to continue advancing. The Fed has prevented further US Dollar losses with their actions, but not so much that investors pull away from high-yielding assets.
Although British data has printed relatively positively on Thursday, the negative sentiment caused by less impressive data on Wednesday has continued to prevent Sterling 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,0.8877 ,
Australian Dollar,,Pound Sterling,0.5506 ,
Australian Dollar,,Euro,0.6973 ,
Australian Dollar,,New Zealand Dollar,1.1178 ,
US Dollar,, Australian Dollar ,1.1264 ,
Pound Sterling,, Australian Dollar ,1.8156 ,
Euro,, Australian Dollar ,1.4338 ,
New Zealand Dollar,, Australian Dollar ,0.8947 ,
[/table]
