After trending higher in response to Australia’s disappointing retail sales figures, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened during the Australasian session.
While the Pound was still feeling the adverse effects of yesterday’s below-forecast Manufacturing PMI, the Australian Dollar received a leg-up from a weakening US Dollar and encouraging domestic data.
Concerns that the US Dollar has been overbought saw the safe-haven asset soften, to the benefit of commodity-driven currencies like the ‘Aussie’.
Additionally, the Australian Dollar was able to strengthen by more than 0.4% against the Pound as investors processed Australian trade balance and building approvals data.
According to Australia’s Bureau of Statistics, the nation’s trade deficit narrowed to below 800 million Dollars in August as imports fell by 2.5% in the month. Exports declined by 1.5%.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate hit a low of 1.8395.
Australian Building Approvals were expected to have increased by 1.0% on the month following a negatively revised increase of 2.1% in July, but they actually jumped by 3.0%.
On a year-on-year basis, approvals were up 14.5%, smashing expectations for a rise of 12.7%.
The Reserve Bank of Australia will be encouraged by this increase in new home construction but will be hoping for its continuation.
As stated by economist Ben Jarman; ‘Part of the reason why the RBA were initially fairly comfortable with rising house prices was because they viewed that as the mechanism that creates incentive to bring on new home supply. The fact that we have had one of the more impressive home building cycles for probably a decade is partly to do with the fact that home prices have been rising. Now for the RBA the issue is how the financial stability risks of rising house prices trade off against the positives that you get from new building.’
Pound Sterling to Australian Dollar Exchange Rate Forecast
With the weekend fast approaching investors can expect additional movement in the Pound Sterling to Australian Dollar exchange rate to occur in response to the AiG Performance of Service Index, Australia’s HIA New Home Sales figures and China’s Non-Manufacturing PMI.
The UK’s Services/Composite PMI could also have an impact on the GBP/AUD exchange rate. As the UK services sector accounts for 70% of total growth, a strong print in this area could counter the decline in manufacturing.
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,0.8779,
Australian Dollar,,Euro,0.6954,
Australian Dollar,,Pound,0.5423,
Australian Dollar,,New Zealand Dollar,1.1147,
US Dollar,,Australian Dollar,1.1383,
Euro,,Australian Dollar,1.4371,
Pound Sterling,,Australian Dollar,1.8427,
New Zealand Dollar,,Australian Dollar,0.8897,
[/table]
