Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Sheds 0.3%
As the Reserve Bank of Australia’s policy meeting minutes helped to ease concerns that the central bank will be introducing an interest rate cut in the near future, the ‘Aussie’ was boosted and the Pound Sterling to Australian Dollar (GBP/AUD) lost 0.3% during the Australasian session.
The minutes did reiterate that the Australian Dollar remains high by historical standards, but investors chose to dwell on the interest rate remarks.
Australian Dollar gains were a little restrained by a decline in China’s Manufacturing PMI. The index slipped from 50 to 49.5 in December, falling below the 50 mark separating growth from contraction.
Earlier…
GBP/AUD Exchange Rate Hits 1.9152
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate pushed to a high of 1.9152 during the Australasian session as the ‘Aussie’ posted broad-based declines in response to a siege in Sydney’s financial district.
The gunman holding several people hostage in a cafe in Sydney has been identified as Iranian, but it is believed that he is acting alone and is not part of an Islamic extremist group.
China’s softer growth outlook also weighed on the commodity-driven Australian Dollar.
Today’s CBI Trends Selling/Trends Total Orders reports failed to cause any movement in the GBP/AUD exchange rate and investors will now be focusing on the upcoming publication of minutes from the Reserve Bank of Australia’s latest policy meeting and China’s HSBC manufacturing PMI.
Earlier…
GBP/AUD Exchange Rate Climbs as Oil Prices Fall
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced over the course of South Pacific trading as oil prices continued to fall.
As well as slipping against the Pound, the Australian Dollar fell to a low of 82.29 cents against the US Dollar – an almost four and a half year low.
According to economist David de Garis; ‘The Norwegian Krone and the Canadian Dollar sat at the bottom of the major-currency leaderboard. The New Zealand Dollar and the Australian Dollar were close behind.’
In the hours ahead, GBP/AUD movement could be triggered by UK house price data and the Confederation of British Industry’s Trends Selling/Trends Orders reports.
Earlier…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate spent much of the last week trading in a stronger position as the prospect of the Reserve Bank of Australia (RBA) introducing an interest rate cut next year weighed on the currency. Softer commodity prices and an increase in Australia’s unemployment rate also took a toll.
Will the Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Extend Gains?
The Pound Sterling to Australian Dollar (AUD/GBP) exchange rate spent the week trending between highs of 1.91 and lows of 1.87.
Next week is particularly data-heavy and the Pound Sterling to Australian Dollar exchange rate could experience extensive movement over the next five days.
On Tuesday GBP/AUD movement will be caused by the RBA meeting minutes and the UK’s Consumer Price Index.
If the minutes are dovish in tone or include any alteration of language on the subject of exchange rates, the Australian Dollar could tumble.
However, given that RBA Governor Glenn Stevens recently tried to calm interest rate cut speculation by claiming that the Australian economy is performing as the central bank expects, this month’s meeting minutes may be a carbon copy of those published in November.
In those minutes the central bank reiterated previous comments regarding the domestic currency being high by historical standards and highlighted concerns reading Australia’s overheating housing market.
RBA Minutes May Shed Light on Rate Cut Speculation
While commenting that the Australian Dollar remains high by historical standards and that the currency is likely to fall in the months ahead, Stevens asserted that domestic growth, employment and inflation are in line with the central bank’s projections and that the RBA is attempting to foster an environment of stability and predictability with its fiscal policy stance.
In the opinion of currency strategist Ilya Spivak; ‘A shift in the relative monetary policy outlook may break the [currency market] deadlock in the week ahead. Shifting expectations over recent weeks have delivered a priced-in G10 forecast that sees the RBA as one of the most dovish central banks in 2015. Indeed, with OIS rates implying at least one interest rate cut in the coming 12 months, the Australian monetary authority leads on the conventional policy easing front. Only the BOJ and the ECB may edge out Glenn Stevens and company for the most-dovish crown, and then only via expansions of non-standard measures.’
UK Inflation Report to Prove Influential for the Pound Sterling (GBP) Exchange Rate
Similarly, signs of slowing consumer price growth in the UK would support the case for a delayed BoE rate hike and would undermine demand for the Pound.
If the British Consumer Price data impresses, on the other hand, the GBP/AUD exchange rate could climb.
Last month the UK inflation rate unexpectedly rose to 1.3%, largely due to a shallower decline in transport costs. At the time the BBC noted that ‘the small rise seemed largely due to seasonal factors, such as the timing of student fee increases and sales of Christmas games, and that the overall trend for CPI was probably still downwards.’
David Kern of the British Chambers of Commerce also observed; ‘the impact of low oil prices will have a noticeable impact in coming months, causing inflation to drop. We expect inflation to fluctuate around 1% until late 2015, before rising towards 2.0% in 2016.’
Similarly, economic adviser Martin Beck observed; ‘Given the increasingly dovish mind-set of the majority of the Monetary Policy Committee, it is unlikely that they will even contemplate an increase in interest rates in the near-term. Indeed, the risks are becoming increasingly skewed towards a lengthy period of inaction.’
This Week’s Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
Over the rest of the week the direction taken by the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate could depend on Australia’s Westpac Leading Index and Skilled Vacancies figures.
Investors will also be focusing on the UK’s stats, including influential employment figures and retail sales numbers, and reports from China, such as the nation’s HSBC Manufacturing PMI, MNI December Business Indicator and Property Price figures.
On Friday the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trading in the region of 1.8992.
