As Thursdays session progressed the Pound to Australian Dollar (GBP/AUD) exchange rate was trading steadily in the region of 1.82, with no more market moving data due for either the UK or Australia the currency pair is forecast to end the week in that range.
Earlier in the session the GBP/AUD exchange rate climbed above the 1.82 level on Thursday as UK retail sales supported, further gains were forecast to be restrained as the data also increased concerns over low UK inflation.
On Wednesday the Pound to Australian Dollar (GBP/AUD) exchange rate advanced back above the 1.81 level as the minutes of the Bank of England’s November Policy Meeting offered support.
The minutes came in less dovish than forecast easing the pressure on Sterling.
Earlier in the session the ‘Aussie’ softened after Japanese Prime Minister called for early elections after the worlds third largest economy fell into recession in the third quarter of the year. Demand for riskier assets fell as a result.
On Tuesday the GBP/AUD exchange rate weakened to fall to the 1.79 level as UK inflation data disappointed economists, the Australian Dollar meanwhile was finding support from minutes released by the Reserve Bank of Australia.
On Monday the Pound (GBP) to Australian Dollar (AUD) exchange rate strengthened as demand for riskier commodity based assets eased on renewed fears over the strength of the global economy. Of particular concern are moutning fears over the Ukraine crisis and the news that Japan slid into recession.
At the G20 summit in Brisbane, Mr Cameron told world leaders and the press that the instability being created by the weakness in the Eurozone, the west’s standoff with Russia, the war with the self-proclaimed Islamic state and the Ebola crisis is threatening the global economy and could have negative impacts on the UK’s recovery.
‘Red warning lights are once again flashing on the dashboard of the global economy six years on from the crash that brought the world to its knees. The Eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too. Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down,’ said Mr Cameron.
The Pound softened further after Cameron’s speech, as investors grow increasingly nervous over the health of the UK recovery. Last week’s inflation warning delivered by the Bank of England (BoE) sent Sterling tumbling to multi-month lows against a basket of major peers.
China Deal Supports Australian Dollar Exchange Rate
The Australian Dollar remained higher and continued to trade at its highest level in two-weeks, despite the release of softer than forecast domestic vehicle sales data.
The report released by the Australian Bureau of Statistics showed that new motor vehicle sales dropped 1.6% in October, after an increase of 2.9% the previous month.
The Australian currency did find support however from news that Australia and China sealed an historic free trade deal. The agreement will see the abolition of tariffs in the resources and agricultural sectors, which should aid the Australian economy in the wake of the slowdown in the mining sector.
The GBP/AUD exchange rate could weaken further on Wednesday if the latest BoE policy meeting minutes show that policy makers grew more dovish towards hiking interest rates.
