The GBP/AUD exchange rate continued to soften in quiet trading. With nothing in the way of UK or Australian data due and the closure of the US markets, the currency pair is forecast to be range bound for the rest of the session.
Earlier on Thursday the Pound to Australian Dollar exchange rate gave up some of the previous sessions gains as the ‘Aussie’ received support from positive domestic data and a fall in the US Dollar.
As Wednesday’s session progressed the Pound to Australian (GBP/AUD) Dollar exchange rate strengthened beyond the 1.85 level as falling iron ore prices and speculation over an RBA rate cut weighed upon the ‘Aussie’.
Earlier on Wednesday the Pound to Australian Dollar exchange rate continued to push higher as tumbling iron ore prices combined with Tuesday’s comments made by the Australian central bank.
On Tuesday the Pound to Australian Dollar exchange rate was continuing to be stronger as comments by RBA deputy governor Philip Lowe continued to weigh heavily on the ‘Aussie’. With UK GDP data in focus the Pound is forecast to make further gains.
Earlier in the session the Pound to Australian Dollar (GBP/AUD) exchange rate advanced to a two week high and is forecast to make further gains after the Reserve Bank of Australia talked down the currency and tumbling iron ore prices.
Against the US Dollar, the ‘Aussie’ fell to its lowest level in four years and tumbled sharply against the Euro and other major peers.
Deputy Governor of the Reserve Bank of Australia (RBA) Philip Lowe spurred on the sharp declines after saying that he expects the currency to weaken further as commodity prices continue to fall and business investment declines. Lowe also warned that the elevated value of the currency is having a negative impact upon wage growth and rising business costs.
‘If the exchange rate is to play its important stabilising role, it needs to go down when the terms of trade and investment are declining. Concerns about the overall level of wages in Australia are, to some extent, really concerns about the exchange rate, with the high exchange rate leasing to high wages expressed in foreign currency terms,’ said Lowe at a business conference.
Lowe’s comments added to a report released on Monday, which showed that Australian mining investment is set to make a record fall over the next few years as the nation’s mining boom ends. The price of iron ore continues to weaken due to slowing demand from China and an oversupply in the markets.
Also weighing upon the ‘Aussie’ are concerns over the global economy and the strengthening of the US Dollar.
Even positive consumer confidence data was unable to offer support to the tumbling currency. The ANZ-Roy Morgan weekly consumer confidence index indicated confidence had risen 1.2% to 114.3 for the week ending November 23; a positive sign for retailers in the lead-up to Christmas.
Market attention will now turn to upcoming US data releases and comments made by Bank of England Governor Mark Carney.
