The Pound to Australian Dollar exchange rate rose to its best level in a week on Wednesday after the battered UK currency managed to claw background as expectations for a US Federal Reserve Interest rate hike weighed heavily on the ‘Aussie’.
Against the US Dollar (USD), the Australian Dollar tumbled to its lowest level in six –months as the AUD/USD currency pair breached major technical levels.
Sterling was still under heavy pressure against many of its major peers midweek as concerns over next week’s Scottish referendum vote continues to spook the markets.
In an attempt to win back support for Scotland remaining a part of the United Kingdom, the leaders of the three main political parties have headed north of Hadrian’s Wall to rally supporters of the 300-year old union. Whether their presence will be a help or a hindrance remains to be seen, as all of the leaders are not exactly popular.
“There is a lot that divides us – but there’s one thing on which we agree passionately: the United Kingdom is better together, That’s why all of us are agreed the right place for us to be tomorrow is in Scotland, not at prime minister’s questions in Westminster,’ the leaders said in a joint statement.
The Pound rally against the Australian Dollar was not because of any domestic strength or support but came because of increasing expectations that the US Federal Reserve will choose to raise interest rates sooner than expected.
Weaker than forecast Westpac Banking Corporation consumer sentiment data also weighed heavily upon the ‘Aussie’. The confidence index declined by 4.6% to a score of 94.0 this month, a sharp drop from the 3.85% increase recorded in August.
“The Index is now 5.8 percent below the pre-budget level and only 1.1 percent above the post-budget print,” Westpac economist Bill Evans said. “In effect most of the steady recovery we had seen in the Index over the last three months has been eroded.”
Also weighing upon the Australian Dollar are concerns that a drought could have a negative impact upon the yields of many crops. Cotton and wheat yields are expected to be below targets and as Australia is one of the world’s main exporters of those goods a fall in yield will impact upon the nation’s trade figures.
Iron ore, Australia’s most exported commodity is also struggling as prices tumbled further to its lowest level in five years as demand from China continues to fall.
Pound Sterling to Australian Dollar Exchange Rate Forecast
Sterling is forecast to continue to stay higher against the ‘Aussie’ but further gains are likely to restrained as the Scottish referendum draws closer. A victory for Scotland’s pro independence campaign however will see the Pound decline against all of its peers.
UPDATE
The Pound Sterling to Australian Dollar exchange rate fluctuated overnight as investors digested a better-than-expected set of employment figures for August and the latest Scottish independence poll.
While the Australian Dollar was supported against the majority of its currency counterparts as the employment data showed that a record number of positions were added in August, taking the unemployment rate down to 6.1%, the Pound was also boosted as nationalists were shown to have taken the lead in the most recent survey on Scottish autonomy.
The Pound to Australian Dollar exchange rate hit a high of 1.6244.
Further Australian Dollar gains were also limited by the news that the pace of inflation in China (Australia’s main trading partner) slowed in August.
With no UK reports scheduled for publication today, volatility in the GBP/AUD exchange rate will most likely be caused by Scottish referendum discussions.
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,0.9127 ,
Australian Dollar,,Pound Sterling,0.5670 ,
Australian Dollar,,Euro,0.7057 ,
Australian Dollar,,New Zealand Dollar,1.1101 ,
US Dollar,, Australian Dollar ,1.0955 ,
Pound Sterling,, Australian Dollar ,1.7634 ,
Euro,, Australian Dollar ,1.4168 ,
New Zealand Dollar,, Australian Dollar ,0.9007 ,
[/table]
