A lack of influential economic news might be restraining movement in the Pound to Australian Dollar (GBP/AUD) exchange rate on Monday, but the pairing could be on the verge of a notable upswing.
Last week Sterling softened against the ‘Aussie’ as a stream of UK fundamentals (including the nation’s manufacturing/industrial/construction output reports) fell short of forecasts – leading some industry experts to speculate on the resilience of the UK’s ‘robust’ economic recovery.
The Pound weakened against several of its most traded rivals over the course of the five days, deriving no support from a frankly very dull Bank of England rate decision.
While the Australian Dollar came under pressure of its own (thanks to a disappointing domestic employment report and sub-par Chinese trade data) the South Pacific asset showed its resilience and closed the week trending higher against the Pound and US Dollar.
On Monday the GBP to AUD exchange rate opened the European session trading in the region of 1.8242, up by a modest 0.1% on the day’s opening levels.
During Australasian trading, figures compiled by the Reserve Bank of Australia detailed a decline in credit card usage and an increase in reliance on debit cards. Following on from two months of declines, credit card spending was fairly stagnant in May. Debit card spending was also fairly static on a month-on-month basis, but advanced by 5.0% on the year.
While this data could indicate that consumers are losing confidence in their future prospects (and are therefore avoiding credit situations) it may also imply that consumers are wising up when it comes to costly credit card charges.
According to industry expert Craig James; ‘While businesses are borrowing, investing and employing again, consumers are reluctant to take on debt. This is no more apparent than in the credit card figures released each month by the Reserve Bank’.
As there is a decided lack of economic news on the cards for the UK today, movement in the Pound to Australian Dollar exchange rate could well be limited.
However, volatility in the pairing is almost guaranteed tomorrow.
While the British Retail Consortium is due to publish like-for-like sales figures for June, movement is more likely to be occasioned by the release of minutes from the latest RBA policy meeting.
If the minutes contain further attempts to talk down the strength of the Australian Dollar, the commodity-driven currency could register widespread declines and the GBP/AUD pairing may surge.
Later on Tuesday, investors will be focusing on the UK’s Consumer Price Index. As Bank of England rate hike speculation has been a major controlling factor in the strength of the Pound over the last few months, if the inflation figures should support the case for a BoE rate hike Sterling could test fresh highs.
UPDATED: 16:50 GMT 14 July, 2014
RBA Minutes Under the Microscope
With the release of minutes from the RBA’s policy meeting fast approaching, the Pound to Australian Dollar (GBP/AUD) exchange rate was 0.22% softer.
Investors may well ditch the ‘Aussie’ if the minutes are pessimistic in tone, allowing Sterling to advance ahead of the publication of the UK’s Consumer Price Index.
Over the course of the European trading session, the GBP/AUD exchange rate was trading in a comparatively narrow range, moving from highs of 1.8248 to lows of 1.8167.
The US Dollar to Australian Dollar exchange rate weakened slightly as tomorrow’s testimony from Federal Reserve Chairwoman Janet Yellen was dwelt on.
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, 0.9391,
Australian Dollar,,Euro, 0.6886,
Australian Dollar,,Pound, 0.5484,
Australian Dollar,,New Zealand Dollar, 1.0651,
US Dollar,,Australian Dollar, 1.0648,
Euro,,Australian Dollar, 1.4516,
Pound Sterling,,Australian Dollar, 1.8224,
New Zealand Dollar,,Australian Dollar, 0.9372,
[/table]
Comments are closed.