Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Softens to 1.9497
Bets that the Bank of England (BoE) will strike a dovish tone in its quarterly inflation report (due out on Thursday) saw the Pound edge lower against several of its peers on Monday.
The British asset lost 0.2% against the ‘Aussie’ over the course of the local session.
During Australasian trading, the GBP/AUD exchange rate could experience movement as a result of Australia’s ANZ Roy Morgan Consumer Confidence Index and China’s Aggregate Finance figures.
Investors will also be looking ahead to the publication of the UK’s Industrial/Manufacturing production reports.
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate extended gains over the weekend as China published disappointing trade data.
Imports were believed to have fallen by -3.2% on the year in January but they actually slumped by a whopping -19.9%.
As Australia is China’s largest trading partner, the data was shown to bode badly for the trade relationship between the two nations and the ‘Aussie’ broadly softened.
In the view of currency strategist Todd Elmer; ‘It’s pretty clear that the weakness in Chinese imports is serving as a drag on sentiment for Australia. This will be taken as an indication of softer domestic demand in China, which threatens fallout in Australia via the commodities channel. Given how large the miss that we saw with those imports versus expectations, that will help to pressure the ‘Aussie’ going forward.’
Australia’s ANZ Job Advertisements figure came in at 1.3% on the month in January, down from 1.8% in December.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trading in the region of 1.9555
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate may climb back above 1.96 cents this week if UK data continues supporting the case for a sooner-rather-than-later BoE interest rate increase.
GBP/AUD Exchange Rate Sheds RBA Gain
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate experienced a volatile week of trading, moving between lows of 1.92 and highs of 1.97, as the Reserve Bank of Australia (RBA) cut interest rates.
The central bank slashed the benchmark rate to a new record low on Tuesday, citing an overvalued domestic currency, inflation concerns and global economic pressures.
The action saw the Australian Dollar plummet against the majority of its currency counterparts and brush a new multi-year low against the Pound.
Federal Treasurer Joe Hockey said of the development; ‘This is good news for Australian families and it’s good news for Australian business. It’s good news for jobs and it’s good news for households. This will put an extra $750 a year into the pockets of a typical Australian family with a mortgage of $300,000.’
Fears that the RBA might have plans to cut borrowing costs again in March also weighed on the South Pacific currency.
However, the ‘Aussie’ recouped losses against Sterling after the People’s Bank of China (PBOC) introduced new stimulus measures.
The RBA’s monthly monetary policy statement was also ‘Aussie’ supportive as it indicated that the central bank will hold off cutting interest rates further due to housing bubble concerns.
The Australian Dollar pushed its way back to trade in the region of 1.9494 despite the Pound being supported by the week’s positive UK PMI’s.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
However, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate could rally in the week ahead if the UK’s industrial/manufacturing production, NIESR GDP estimate and construction output figures indicate that the UK’s economy got off to a solid start to the year.
Positive UK reports could push the Bank of England (BoE) into increasing interest rates earlier than currently projected, and speculation to this affect would be Pound-supportive.
That being said, the BoE is also scheduled to release its inflation report this week, and dovish comments would prevent a Sterling upswing.
The GBP/AUD exchange rate may also experience volatility as a result of Australia’s employment figures.
Disappointing jobs data would weigh on the Australasian asset.
Given the RBA’s recent remarks about a housing bubble, Australia’s housing data will be of greater interest in the weeks ahead. If the housing market isn’t shown to be overheating, it could put RBA rate cut bets back on the table and cause ‘Aussie’ weakness.
At the close of the week, the Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7809
The Australian Dollar to Euro (AUD/EUR) exchange rate was trending in the region of 0.6884
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in the region of 1.9535
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.5116
