The Australian Dollar (AUD) to Pound Sterling (GBP) exchange rate edged away from a 9-month high on Tuesday due to disappointing data out of Australia and positive Industrial production data out of the United Kingdom.
On Monday, the Australian Dollar surged against the Pound after the UK currency took a beating from increased concerns over the upcoming Scottish Referendum vote. Concerns are high that Scotland will vote to leave the UK after the pro-
Independence Yes campaign was shown to have drawn level with the pro-Union No campaign. As a result, the Pound tumbled against all of its major peers.
Disappointing Business confidence and home loans data out of Australia however saw the AUD/GBP exchange rate move lower on Tuesday.
According to Australia Bank’s monthly Business survey, confidence amongst the South Pacific nations businesses fell by 2-points in August to a reading of 8. Business conditions also declined by 4 points in August after rising by 5 in July.
A separate piece of economic data also showed that the number of home loans issued in Australia rose 0.3% in July, disappointing expectations for an increase of 1.0%. June’s figure was revised to a 0.1% gain from a previously estimated 0.2% rise.
Some of the worries over a possible victory for Scottish nationalists on September 18 eased slightly on Tuesday after the Financial Conduct Authority (FCA) announced to Parliament that it is making contingency plans in case Scotland does choose to leave the union.
The major positive move for the Pound however came from the release of stronger than forecast UK Industrial Production data.
According to the London based Office for National Statistics (ONS) industrial production made its biggest increase since February after production increased by 0.5% on a month on month basis in July, a stronger figure than the 0.2% rise expected by economists.
On an annual basis, industrial production increased by 1.7%, a figure that beat forecasts for a rise of 1.3%. The data also showed that the UK’s manufacturing sector also expanded by 0.3%.
Restraining further gains for the Pound was a separate report, which showed that the UK’s trade deficit widened to £3.3 billion in July as a weak Eurozone weighed negatively on exports. The overall deficit now stands at £10.2 billion, up from July’s figure of £9.4 billion.
Australian Dollar to Pound Sterling Exchange Rate Forecast
The Australian Dollar is likely to remain at a multi month high against the Pound until September 18 as uncertainty over the Independence vote is likely to increase the closer we get to polling day. It would take some substantially positive UK data to reverse the trend.
UPDATE
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate extended losses during the Australasian session as the Westpac gauge of Consumer Confidence fell from 98.5 to 94.0.
The -4.6% decline wiped out the previous month’s 3.8% gain and weighed heavily on the ‘Aussie’.
Westpac cheif economist Bill Evans said this of the result; ‘For September, budget and taxation continues to dominate. Households are a little more comfortable with the Budget but it continues to dominate their thinking and they remain on edge. Concerns aroudn the medium-term outlook are likely to make households more cautious.’
The Pound was also deriving some support from hopes that intervention from several high-profile UK politicians will swing the Scottish referrendum in favour of the unionists.
With Australia’s employment report ahead, further Australian Dollar to Pound Sterling volaitlity can be expected.
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,0.9277 ,
Australian Dollar,,Pound Sterling,0.5757 ,
Australian Dollar,,Euro,0.7197 ,
Australian Dollar,,New Zealand Dollar,0.8908 ,
US Dollar,, Australian Dollar ,1.0780 ,
Pound Sterling,, Australian Dollar ,1.7370 ,
Euro,, Australian Dollar ,1.3893 ,
New Zealand Dollar,, Australian Dollar ,0.8908 ,
[/table]
