GBP/AUD Conversion Rate Predicted to Soften as Sterling Tracks Global Stocks Rout
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate declined by around -0.6% on Tuesday morning.
The British Pound softened versus nearly all of its major peers on Tuesday as the global stocks rout weighed on demand. Since the turn of the year the Pound has become increasingly risk-sensitive and vulnerable to equity market volatility. This is mostly due to concerns that the poor health of the global economy will allow Bank of England (BoE) policy makers to avoid hiking the cash rate for a considerable time to come. The Pound is also struggling amid damp confidence following a speech from Monetary Policy Committee (MPC) member Kristin Forbes. The US native highlighted the low price of oil as a major reason for policymakers to hold the current policy outlook with inflation likely to remain low for a considerable period.
‘I would like to see a bit more upward movement in these wage and cost measures to build confidence that the normal chain of tight labour markets feeding through into higher wages is still intact,’ she said in the speech, published on Monday. ‘The most recent falls in oil prices, by delaying the recovery in inflation, provide the luxury of a bit more time to build this confidence.’
‘Once this upward momentum in wages and unit costs builds — as I expect it will — then it will be time’ for the UK to ‘begin the slow and gradual process of tightening monetary policy,’ she added.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0397.
AUD/GBP Conversion Rate Predicted to Advance despite Plunging Chinese Stocks
Although the Shanghai Composite Index ended the Asian session over 6.4% lower, the Australian Dollar advanced versus nearly all of its most traded currency rivals. The appreciation can be linked to news that the PBoC intends to inject 440 billion Yuan via reverse repos which is the biggest daily injection in three years.
‘The PBOC remains reluctant to conduct system-wide easing, such as RRR cuts across the board, on the back of depreciation concerns and huge new loans in the first couple of weeks of the year,’ said Becky Liu, senior rates strategist at Standard Chartered Plc in Hong Kong. ‘The large amount of cash shows its firm determination to maintain accommodative money-market conditions, and to use short-term tools to boost liquidity.’
Also supportive of demand for the Australian Dollar is speculation that the PBoC will put in every effort to stabilise markets and Yuan positioning ahead of a week-long national Holiday, the Lunar New Year, which commences February 8th.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 2.0345 during Tuesday’s European session.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast: US Consumer Confidence to Provoke Volatility
Given the absence of both British and Australian data for the remainder of the European session, there is a good chance that the GBP/AUD exchange rate will hold losses for the remainder of Tuesday’s trade. However, given the US Dollars relationship to the Australian Dollar, there is a chance that US Consumer Confidence data will shake things up for the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 2.0533.
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