The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate posted a very modest advance of 0.1% on Wednesday.
The GBP/AUD pairing has been trending in a narrow range for days due to a lack of sentiment shifting economic reports, but with a run of volatile releases due out in the hours ahead the currency market is starting to register some movement.
Yesterday the Pound briefly climbed in response to unexpectedly upbeat UK Mortgage Approvals figures (which bolstered arguments in favour of the Bank of England intervening further in the UK’s ‘overheating’ property market).
However, with last week’s disappointing UK data sets still weighing on investors and the appeal of the Pound slightly subdued by comments from a BoE official, Sterling’s advances were modest and short lived.
During the Australasian trading session there was a decided lack of economic reports for the South Pacific nation.
However, data from China (Australia’s biggest trading partner) did print positively. While the Westpac-MNI Consumer Sentiment Index for June fell to a 12-month low of 112.6, Chinese consumer confidence has improved and the measure advanced to 114.8.
At the start of the year fears of an economic slowdown in China had been weighing on not only the domestic outlook but the economic prospects of countries like Australia. However, the government introduced some fresh stimulus measures and in recent week’s China has published some more encouraging economic reports.
However, some industry experts are cautioning that China still faces headwinds. In a statement issued with the Westpac-MNI report economist Huw McKay commented; ‘A month ago the employment indicator was sitting at levels that have been associated with policy easing in previous cycles. A further decline from those already depressed levels in July implies that it would be unwise for the authorities to declare victory too early on the growth front […] On the financial front, consumers are now broadly neutral on stock price direction over the next three months, after being quite negative in June.’
Pound Sterling to Australian Dollar Exchange Rate Forecast
The Pound Sterling to Australian Dollar exchange rate was little-changed during the European session as the only UK data of the day (the Lloyds Business Barometer) was published.
The gauge edged up to 52 in July from 51 in June.
We forecast that movement in the GBP/AUD pairing could be triggered later today as the US releases not only ADP Employment Change figures but growth data for the second quarter.
The US economy contracted by -2.9% in the first quarter of the year as a variety of factors (including extremely bad winter weather) took a toll. Economists are expecting that the world’s largest economy rebounded in the second quarter, posting growth of 3.0%.
If this proves to be the case it will increase the likelihood of the Federal Reserve revising borrowing costs in the near future, a circumstance which would be detrimental to higher-risk currencies like the Australian Dollar. Therefore, good news from the US could help the Pound to Australian Dollar exchange rate advance.
Later in the day the Federal Open Market Committee will publish its interest rate decision and Australia will release Building Approvals figures.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trading in the region of 1.8072.
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, 0.9369,
Australian Dollar,,Euro, 0.6984,
Australian Dollar,,Pound, 0.5530,
Australian Dollar,,New Zealand Dollar, 1.1009,
US Dollar,,Australian Dollar, 1.0674,
Euro,,Australian Dollar, 1.4301,
Pound Sterling,,Australian Dollar, 1.8070,
New Zealand Dollar,,Australian Dollar, 0.9071,
[/table]
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