The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been bullish in the early part of Wednesday’s European session after Australian GDP growth tanked.
The GBP/AUD currency pair found support when the Australian economy stalled in the third quarter. GDP figures recorded only 0.3% growth in Q3 pulling the annual figure down to 2.7% from 3.1%.
Forex expert Chris Tedder commented: ‘The Reserve Bank has been forecasting below trend growth but the numbers we got out today are well below forecasts… Accordingly, the ‘Aussie’ Dollar has taken a battering.’
Pound Exchange Rate (GBP) Falls on Weak UK Data
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remained bearish throughout Tuesday’s trading as weak UK data saw investor sentiment in the British currency wane.
Tuesday’s Markit’s UK Construction Purchasing Managers Index (PMI) fell from 61.4 to 59.4 in November marking the slowest growth in the last 13 months.
The report stated: ‘Construction firms remain on balance highly optimistic about the prospects for output growth.’
Wednesday will see the release of Markit UK Services and Composite PMI which could boost the Pound if favourable.
RBA Leaves Monetary Policy Unchanged – ‘Aussie’ Falls
Earlier in the session… The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate recorded losses early on Tuesday after the Reserve Bank of Australia (RBA) left its monetary policy unchanged.
The central bank announced that a period of stable borrowing costs would be the most advisable course of action for the near future.
Strategist Greg Gibbs commented: ‘Maybe the market was looking for the RBA to drop their ‘prudent stability’ kind of language, and they didn’t do that.’
UK Data Bolsters Pound Sterling Exchange Rate
In Monday’s session… The Pound to Australian Dollar (GBP/AUD) extended its gains in the latter half of the European session following the release of favourable UK data.
Markit’s UK Manufacturing Purchasing Mangers Index rose to 53.5 in November climbing further into expansion territory.
The report read: ‘Manufacturing production rose for the twentieth successive month in November, as companies scaled up output in response to improved outflows of new work.’
Meanwhile, UK Mortgage Approvals also proved more favourable than economists’ had forecast at 59.4K in November.
Australia’s House Price Index Dips Pressuring ‘Aussie’ Lower
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced early in Monday’s European session after Australia’s CoreLogic House Price Index dipped. The month of November showed a 0.3% contraction after house prices in Melbourne slid by 2.6%.
Analyst Cameron Kusher commented: ‘I think that is a a trend that we are definitely starting to see emerge, that the rate of growth is slowing across pretty much all capital cities.’
Earlier… The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate experienced a turbulent week this week causing the currency pair to fluctuate.
After the Australian Dollar had been bearish in the start of the week, Thursday saw it claw back some losses against other currency majors such as the Pound.
UK Politics Drag Pound Sterling Exchange Rate Down
The Pound became bearish as the UK politics became unstable, with political parties engaging in debates ahead of the general election in May 2015.
In the week ahead, Sunday will see the Australian AiG Performance of Manufacturing Index released which could help bolster the Australian Dollar further if printed favourably. Despite the falling price of iron ore weighing on the ‘Aussie’, upbeat Australian domestic data could help to boost the currency.
Monday begins the week with the Australian Company Operating Profit and Commodity Index, which although of little influence, could still sway the exchange rate. Later in the European session Markit will release its UK Manufacturing Purchasing Managers Index (PMI) which resided at 53.2 in October.
GBP Exchange Rate Affected by UK Property Market
UK Net Consumer Credit, UK Mortgage Approvals, and Net Lending Secured on Dwellings will also be out on Monday and the latter two could give more indication into the state of the housing market. Speculation about a cooling period in UK property has been rife in recent months and therefore Monday could offer further evidence.
However, things will start to heat up on Tuesday when the Reserve Bank of Australia (RBA) is scheduled to release its interest rate decision. Even though it is unlikely that the central bank will move the official cash rate, the event could still see some ‘Aussie’ exchange rate fluctuations in the lead up.
BoE Rate Decision Impacts the Pound Sterling Forecast
Thursday gets more interesting for the Pound when the Bank of England (BoE) announces its own rate decision. Some hawkish economists’ have suggested that the possibility of a rate rise in the UK before Christmas is still a possibility; however, with recent dovish statements from the BoE and a string of less favourable UK data, the possibility of increased borrowing costs in 2014 is looking like a lost cause.
Another factor of high influence for the Pound Sterling exchange rate will be Friday’s BoE inflation expectations which could be extremely unfavourable. In recent weeks BoE Governor Mark Carney stated that inflation could temporarily dip below 1.0% as the UK economic recovery slows.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trading at 1.83767.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trading at 0.544166.
