The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate fluctuated between lows of 1.8812 and highs of 1.8951 on Wednesday.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Fluctuates after UK Trade Data
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate fell during the Australasian session as the UK’s disappointing industrial production/manufacturing production reports undermined demand for the Pound and the ‘Aussie’ was boosted by offshore trading.
Even an over 5% decline in Westpac’s gauge of Australian consumer confidence failed to push the Australian Dollar lower, and the commodity driven currency derived some support from Australia’s Home Loans report.
Home loans had been expected to increase by 0.1% in October, month-on-month, but they actually climbed by 0.3%.
During the European session the Pound failed to benefit from the news that the UK’s trade deficit narrowed slightly in October. Sterling was restrained by an assertion from the British Chambers of Commerce that a premature interest rate hike from the Bank of England (BoE) could undermine the UK’s recovery.
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate consolidated gains on Tuesday as economic reports for Australia fell short.
GBP/AUD Exchange Rate Higher
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate leapt to a high of 1.9020 on Tuesday as the level of business confidence in Australia declined.
The National Australia Bank’s Business Confidence index fell from 5 to 1 in November. The NAB Business Conditions index also declined, dropping to 5 from 13.
However, the Pound pared gains against the ‘Aussie’ during the European session as the UK’s industrial/manufacturing production reports disappointed.
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate extended its gains during the European session thanks to a report published by the Bank of England (BoE).
GBP/AUD Exchange Rate Stronger after BoE
On Monday the BoE published its quarterly bulletin. The report indicated that (based on a survey of British consumers) the UK populace could withstand a slow and steady increase of interest rates.
The Pound was buoyed by the report and strengthened against several of its most traded currency counterparts, advancing against the Australian Dollar (GBP/AUD), Euro (GBP/EUR) and US Dollar (GBP/USD).
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed by around 0.4% on Monday as demand for the ‘Aussie’ declined following the publication of disappointing trade data for China – Australia’s largest trading partner.
GBP/AUD Trends Higher, Chinese Imports Decline
The Australian Dollar declined against almost all of its peers on Monday as China’s trade report showed a smaller-than-expected increase in exports and an unexpected decline in imports.
Chinese imports fell by -6.7% on the year in November rather than rising the 4.0% expected.
Exports climbed by 4.7%, much less than the 8.0% annual gain anticipated.
The Australian Dollar fell against rivals like the Pound, US Dollar and Euro in the aftermath of the report’s release.
The Pound was also buoyed by the UK’s Lloyds Employment Confidence index, which climbed from 0 to 1 in November.
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rallied over the course of last week as the odds of the Reserve Bank of Australia (RBA) cutting interest rates in 2015 climbed.
GBP/AUD Boosted by Australian GDP
A poor third quarter growth figure for Australia saw the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rally over the course of the week as the report made the prospect of the RBA cutting interest rates at least once in 2015 increasingly likely.
While industry experts had anticipated third quarter expansion of 0.7%, the South Pacific nation posted growth of just 0.3%. This, in conjunction with persistent weakness in the price of key commodities like iron ore and crude oil, caused the Australian Dollar to soften across the board.
Over the last few months the RBA has advocated the necessity of adopting a steady interest rate policy. This report could see the central bank change their stance and cut borrowing costs to bolster economic growth.
The ‘Aussie’ slid against the Pound and the Australian Dollar to US Dollar (AUD/USD) exchange rate brushed fresh lows over the course of the week.
According to The Australian; ‘The currency has plunged 1.4 per cent this week [against the US Dollar] after several economists changed their forecasts to include a Reserve Bank interest rate cut next year after disappointing September quarter economic growth figures. The futures market is now pricing in, or betting on, a 27 per cent chance of a rate cut in early 2015, up from a 2 per cent chance on Monday.’
On the subject of a possible rate cut, strategist Richard Grace observed; ‘The risk is that it will happen sooner rather than later. Slower global growth, downward pressure on commodity prices and Australia’s falling terms of trade, these factors are all putting downward pressure on the Australian Dollar.’
Pound Sterling (GBP) Gains as Services Sector Expands
The Pound Sterling (GBP) exchange rate, meanwhile, was boosted toward the middle of the week as the UK’s Services PMI rallied from 56.2 to 58.6. A reading of 56.5 had been anticipated.
As the UK services sector accounts for around 70% of total economic growth, the report improved the UK’s outlook and increased demand for the Pound. As stated by economist Samuel Tombs; ‘The pick-up in the UK Markit/CIPS services PMI in November provides reassurance that the UK’s economic recovery has remained strong despite a weaker global environment. Looking ahead, with households’ and firms’ balance sheets in improved health, confidence high and real incomes set to record their strongest growth in more than a decade in 2015, we doubt that the recovery is about to run out of momentum. Our forecast remains for GDP to grow by 3% in both 2015 and 2016.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
If next week’s Australian reports support the case in favour of action from the RBA, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate could trend higher over the course of the week.
The most important Australian report to be aware of next week is the nation’s employment figures. Economists have forecast that the nation added 15,000 positions in November, but that the unemployment rate climbed from 6.2% to 6.3%. A stronger than expected jobs gain would be ‘Aussie’ supportive.
Last month Australia’s employment figures prompted this response from business reporter Micheal Janda; ‘Australia still performs fairly well on overall measures of labour market health – it is in the top third of OECD countries for low unemployment and has almost 53 per cent of the population employed, compared to an average of less than half. However, Australia’s youth unemployment rate of 27.2 per cent is the highest since the 1990s, up from a low of 16.6 per cent just before the global financial crisis in 2008.’
Other Australian reports to look out for this week include the nation’s Roy Morgan Consumer Confidence Index, Consumer Inflation Expectation and Credit Card Purchases/Balances.
Investors with an interest in the Australian Dollar will also be focusing on commodity movements and data published by China, Australia’s largest trading partner.
The Asian nation is due to publish trade figures and retail sales data over the next five days.
All of these have the potential to inspire movement in the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate.
