The Pound to Australian Dollar (GBP/AUD) exchange rate was decidedly buoyant yesterday as investor confidence increased in the wake of the UK’s impressive Consumer Price Index for June.
Sterling surged against the majority of its currency counterparts and briefly strengthened beyond 1.84 in the immediate aftermath of the report’s release.
During Australasian trading the ‘Aussie’ fluctuated in response to data from both Australia and China.
Australia’s Westpac Leading Index came in at 0.1% month-on-month in June, unchanged from the figure recorded in May.
Meanwhile, China published growth figures, industrial production reports and retail sales data.
China’s economy was shown to have expanded by a seasonally adjusted 2.0% in the second quarter, quarter-on-quarter, following growth of 1.5% in the previous three month period. Economists had expected a figure of 1.8%.
On an annual basis, China’s economy grew by 7.5% in the second quarter, beating expectations for growth of 7.4%.
The nation’s Industrial Production figure for June also surprised to the upside, although retail sales fell slightly short of forecasts. As China is Australia’s main trading partner, the results were a positive sign for Australia’s future export prospects.
However, any gains in the Australian Dollar were limited after a Reserve Bank of Australia policymaker, John Edwards, asserted that the currency is overvalued.
Edwards stated; ‘The currency does look a bit overvalued and I’ve no doubt we’d be better off with a cheaper currency. I hope to see it. We might have to wait until global markets are more convinced that the US is actually about to move on the overnight rate.’
Based on Federal Reserve Chairwoman Janet Yellen’s comments to the Senate Committee yesterday, an interest rate increase could take place sooner than currently projected.
Yellen, while intimating that accommodative fiscal policy was still required, did comment that ‘if the labour market continues to improve more quickly than anticipated by the [Fed] then increases in the federal-funds rate target likely would occur sooner and be more rapid than currently envisioned.’
During Wednesday’s European session the Pound to Australian Dollar (GBP/AUD) exchange rate remained in a stronger position, although Sterling did fluctuate following the release of UK employment data.
While the UK’s unemployment rate dropped to a fresh multi-year low, wage growth in the nation continues to struggle.
The Pound to Australian Dollar exchange rate achieved a high of 1.8364.
Australia’s Conference Board Leading Index could cause further movement in the (GBP/AUD) pairing overnight.
UPDATED 16:55 GMT 16 July, 2014
Australian Dollar Recovers Ground
The Pound to Australian Dollar exchange rate gave up some of its recent gains during the European session, easing lower by 0.1% before the close of trade.
With no UK data on the horizon for the rest of the week, the appeal of the Pound was a little compromised by one particular aspect of today’s employment figures.
The increase in employment and the drop in the number of persons filing for unemployment benefit were positive factors, but the news that UK average weekly earnings grew at an even slower pace in the three months to May was a decided negative and could prevent the Bank of England from introducing an interest rate increase in November.
In other currency news, the US Dollar was supported as Fed Chairwoman Janet Yellen readied herself for her second testimony to lawmakers. While Yellen is unlikely to cover any fresh ground, additional hints regarding the potential timeline for the tapering of stimulus could prove influential.
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, 0.9340,
Australian Dollar,,Euro, 0.6899,
Australian Dollar,,Pound, 0.5452,
Australian Dollar,,New Zealand Dollar, 1.0742,
US Dollar,,Australian Dollar, 1.0703,
Euro,,Australian Dollar, 1.4495,
Pound Sterling,,Australian Dollar, 1.8333,
New Zealand Dollar,,Australian Dollar, 0.9306,
[/table]
Comments are closed.