The Australian Dollar (AUD) strengthened to its strongest level of the year so far against the Pound (GBP) on Friday as disappointing Retail Sales data weighed upon the UK currency and as investors turned their attention to the Jackson Hole Symposium.
Sterling came under broad pressure on Thursday after official data published by the London based Office for National Statistics (ONS) showed that UK Retail Sales increased by just 0.1% last month, a figure which was worse than the 0.4% figure forecast by economists.
The data increased concerns that the UK economy is softening and as such saw international buying. As a result, the AUD/GBP exchange rate advanced to 0.56.
Disappointing economic data out of China, Australia’s biggest trading partner was not enough to weigh upon the ‘Aussie’ as the market turned its attention to the evenings Jackson Hole Symposium.
Economists are widely expecting that Federal Reserve Chairman Janet Yellen will deliver a dovish speech when she addresses business and financial leaders.
‘She may be keen to avoid creating a rod for her own back regarding the weight of expectations for future appearances at Jackson Hole. If we don’t get a strident defence of the view that labour market slack is still very significant that should set us back on the path of firmer short-end yields and a firmer US Dollar’ said Ray Attrill, head of currency strategy at National Australia Bank.
Sterling came under pressure on Friday after HSBC bank warned that uncertainty over Scotland’s currency after a Yes victory for Independence next month could prompt capital flight from the country and have a negative impact upon the wider UK.
‘”At the extreme, uncertainty over Scotland’s currency arrangements could prompt capital flight from the country, leaving its financial system in a parlous state.’ Said Douglas Flint, Chairman of HSBC.
According to the Daily Telegraph, more than 100 business leaders signed a joint letter urging Scotland to vote in favour of staying in the 300-year old United Kingdom.
Australian Dollar to Pound Sterling Exchange Rate Forecast
The Australian Dollar is likely to end the week on a high against the Pound but further gains are likely to be limited due to a lack of market moving economic data releases.
Instead, all eyes are fixed on the Jackson Hole meeting.
With the UK markets shut for the Summer Bank Holiday on Monday the Pound is forecast to remain under pressure.
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,0.9322 ,
Australian Dollar,,Pound Sterling,0.5621 ,
Australian Dollar,,Euro,0.7017 ,
Australian Dollar,,New Zealand Dollar,1.1060 ,
US Dollar,, Australian Dollar ,1.0725 ,
Pound Sterling,, Australian Dollar ,1.7781 ,
Euro,, Australian Dollar ,1.4250 ,
New Zealand Dollar,, Australian Dollar ,0.9024 ,
[/table]
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