The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trading in the region of 1.8075 prior to the publication of the UK’s Mortgage Approvals report.
The pairing advanced by over 0.15% overnight as investors speculated on whether the Reserve Bank of Australia (RBA) might be forced into introducing an interest rate cut over the next few months.
Industry experts with Goldman Sachs have indicated that the strength of the Australian Dollar could leave the RBA with little choice but to trim the official cash rate before the close of the year.
One Goldman Sachs representative stated; ‘The game plan has been the RBA to hold rates stable, and accept the currency is overvalued, in anticipation of the Fed moving […] but the more the Fed works to pacify market expectations of a rate rise, he stronger the local currency gets and the harder it is for the RBA to manage.’
However, the appeal of the Australian Dollar was moderately increased by a report showing a rebound in Australia’s New Home Sales.
The New Home Sales report detailed a 1.2% month-on-month increase in June, following a decline of -4.3% in May.
Separate ‘Aussie’ reports showed an improvement in Business and Consumer Confidence.
Dun and Bradstreet conducted a survey which revealed a solid rise in the level of national business sentiment while ANZ’s weekly Consumer Confidence gauge saw a 2.4% rally.
ANZ economist Warren Hogan asserted; ‘Consumer confidence is now back to pre-budget levels and consistent with moderate growth in consumption and economic activity. The good news is that the headline impact of the budget appears to be temporary and the more enduring features of the economy, such as rising share and house prices, job creation and a stable world economy are now driving consumer attitudes to spending and finances.’
During the European session the Pound extended gains as UK Mortgage Approvals were shown to have increased by more-than-anticipated in June.
Pound Sterling to Australian Dollar Exchange Rate Forecast
As today’s UK Mortgage Approvals data indicates that the UK housing market recovered some momentum in June (adding to the case in favour of the Bank of England bringing in interest rate increases to calm the housing sector) the Pound could continue trading in a stronger position against the Australian Dollar in the hours ahead.
During the Australasian session we forecast that additional Pound Sterling to Australian Dollar (GBP/AUD) exchange rate movement could occur as a result of China’s Westpac MNI Consumer Sentiment index for July.
The UK’s Lloyds Business Barometer will also be of some interest on Wednesday.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9394,
Australian Dollar,,Euro, 0.6994,
Australian Dollar,,Pound, 0.5534,
Australian Dollar,,New Zealand Dollar, 1.1030,
US Dollar,,Australian Dollar, 1.0644,
Euro,,Australian Dollar, 1.4298,
Pound Sterling,,Australian Dollar, 1.8061,
New Zealand Dollar,,Australian Dollar, 0.9053,
[/table]
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