Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate forecast to make gains on UK GDP data

Pound to Australian Dollar exchange rate graph

The Pound is expected to make further gains against the Australian Dollar in Wednesday’s session as economists forecast that the UK economy expanded in the fourth quarter of last year.

The Australian Dollar meanwhile was softer against several peers including the US Dollar and Euro after the South Pacific nation’s currency continued to be weighed upon by declining iron ore prices and the publication of downbeat construction data.

According to a report released by the Australian Bureau of Statistics, the value of construction work done in the country fell by -1% in the last three months of 2013. The figure was well below economist expectations for a rise of 0.2%. The report bodes ill for next week’s Australian GDP figures which incorporate the construction data into its final report.

Iron-ore prices tumbled to a seven-month low overnight weighing upon the ‘Aussie’. The commodity is one of Australia’s biggest exports. Also weighing upon the currency are concerns over the health of the Chinese economy. Yesterday saw the Chinese Central Bank weaken the Yuan to its weakest level since July last year.

“It it was the case that China was ceasing the policy of Yuan appreciation, that would probably have some implications for emerging-market currencies broadly. That could feed into a weaker Australian Dollar,” said Ray Attrill, the co-head of currency strategy at the Sydney based National Australia Bank Ltd.

The Pound is likely to push higher against the ‘Aussie’ later in the session if today’s GDP report shows that the UK economy expanded by 0.7% as forecast in the fourth quarter of 2013. If the figure comes in above that figure we can expect the Pound to receive a boost which will send it higher. If the data disappoints then the ‘Aussie’ could recover ground.