The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened by around -0.27% on Wednesday morning.
After UK car registrations data showed sales had reached the highest on record, the Pound strengthened versus many of its most traded currency rivals. The advance has been somewhat laboured, however, thanks to ongoing political uncertainties as we approach the general election.
The Australian Dollar, meanwhile, strengthened versus many of its major peers thanks to the hangover from the Reserve Bank of Australia’s (RBA) decision to hold the benchmark interest rate. This surprise move has seen continued support even after domestic consumer confidence data declined.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9347.
Pound Sterling (GBP) Exchange Rate Advances on Record Breaking Car Sales
The introduction of a new ’15 number plate saw new car registrations enjoy its fourth consecutive month of growth, elevating sales to the highest on record. This allowed the Pound to strengthen versus many of its major peers.
‘We expect a more stable market over the year ahead,’ said Mike Hawes, chief executive of the SMMT. ‘But the fundamentals are still there: there’s still economic confidence, there’s still relatively low interest rates which makes for cheap finance packages . . . and there’s lots of new technology in the cars.’ But he added: ‘It must be said, this can’t go on forever.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 1.9321 today.
Australian Dollar (AUD) Exchange Rate Continues Advance on RBA
Given that most industry experts forecast the RBA to cut its cash rate by 25 basis points on Tuesday, the surprise move to keep rates on hold has seen continued support for the South Pacific currency. This could pose a problem for the Australian central bank given that they have expressed concern over the ‘Aussie’ (AUD) overvaluation.
Disappointing domestic data wasn’t enough to deter traders from the prospect of high-yielding trade. The ANZ Roy Morgan Weekly Consumer Confidence Index declined from 112.3 to 109.7 even after recent rate cuts.
ANZ Chief Economist Warren Hogan commented: ‘The strength in retail sales over January-February is surprising in light of continuing lacklustre ANZ-Roy Morgan Consumer Confidence. One key driver of the softness in consumer confidence has been weak job security. On this note, the March ANZ job ads report points to more of the same with the first monthly fall in job ads in ten months. A key question for the outlook therefore is the extent to which a soft labour market will offset the ‘feel good’ factor from higher asset prices. In our view, these conflicting forces suggest the road for confidence and retail over the next year may be bumpy.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Hold Losses
Given the lack of domestic data to drive changes, and with the forthcoming general election weighing on demand for the British asset, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to hold losses for the remainder of Wednesday’s European session.
Thursday will see heightened GBP/AUD volatility with several influential domestic data publications to drive changes. Of particular significance will be the Bank of England (BoE) interest rate decision. Although most don’t expect any changes, any hawkish notes will be well received. For those invested in the ‘Aussie’ the AiG Performance of Construction Index will be of interest.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 1.9406 today.
