The Pound Sterling to Australian Dollar (GBP/AUD) hit a session high of 1.961 on Thursday.
Concerns over the global economy, falling commodity prices and economic data released in the land down under weighed upon the Australian Dollar and allowed the British Pound to firm ahead of today’s Bank of England (BoE) interest rate announcement.
According to the Australian Bureau of Statistics, retail sales increased by 0.2% in December, a figure that was below forecasts for a rise of 0.4% and added to the 0.1% increase recorded in the preceding month.
Another report showed that the sale of new homes fell by -1.9% in the final month of 2014, a sharp drop from the preceding months figure of a rise of 2.2%.
Commodity Prices Weigh
The ‘Aussie’ was also softened by another drop in oil and iron ore prices. The price of Australia’s most exported commodity fell close to a new five-year low and looks set to drop to $60 a tonne as concerns over the outlook for supply and demand continues to dent sentiment.
‘Oil managed to advance 19% of the past few days, but we saw a correction again yesterday on the back of expecting that oil had hit a low, but I’d be surprised if we saw significant advances going forward given that stockpiles are high,’ said forex trader Matt Richardson.
Bank of China Restrains Losses
The Australian Dollar’s losses were restrained however, as Wednesday’s announcement by the Peoples Bank of China supported.
The bank said that it would introduce more stimuli in an attempt to support the slowing economy.
‘The People’s Bank of China will continue to implement a prudent monetary policy maintained to an appropriate degree, guide monetary credit and social financing to steady moderate growth, and promote the smooth operation of economic health,’ the bank said in a statement announcing its decision.
The Pound Sterling meanwhile found support from a report, which showed that UK house prices climbed unexpectedly in January. Prices surged by their largest amount since May 2014.
According to Halifax, house prices rose by 2% on a month on month basis and by 8.5% on an annual basis.
GBP/AUD Exchange Rate Forecast
Market attention will now focus on the upcoming Bank of England (BoE) interest rate decision and ahead to Friday’s Reserve Bank of Australia (RBA) economic growth and inflation forecasts.
