The ‘Aussie’ began its slide on Wednesday after Gross domestic product data released in the United States smashed economist expectations.
As a result the AUD/USD declined sharply as the ‘Greenback’ was buoyed by the strong data.
The ‘Aussie’ also dropped against the Euro (EUR) and other major peers as investors favoured the US currency.
The Australian asset was further weakened on Thursday morning after data released by the Australian Bureau of Statistics released data which showed that building approvals in the land down under fell more than forecast.
Approvals declined by 5%, worse than the 2% fall expected by economists.
Building approvals have fallen in four of the last five months, suggesting low interest rates aren’t proving the driver of the economy that had been hoped for.
Another report showed that Australia’s export price index dropped sharply in the second quarter of the year to make its biggest quarterly fall since 2010.
According to the data the nations export price index fell 7.9% from the previous quarter and was down 1.9% from the previous year.
The report highlights the issues the nation’s economy is facing regarding the declining prices of metal ores, and other major exported commodities.
The fall in the import price index–also the biggest fall since the fourth quarter of 2010–in part reflected the strength of the local currency, which has been described by the Australian central bank on several occasions as “overvalued.”
Further gains for the Pound meanwhile were restrained after the latest GfK consumer confidence report declined for the time in six months in July.
The confidence index dropped to -2 in July, down from the 1 seen in June which had been the first positive reading in almost a decade.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast
The AUD/GBP exchange rate could experience additional movement before the weekend as a result of various economic reports.
Firstly, Australia is set to release it’s AiG Performance of Manufacturing Index for July. The measure came in at 48.9 in June, well below the 50 mark separating growth from contraction.
Another disappointing result could push the ‘Aussie’ lower.
However, Australia’s main trading partner (China) is also due to publish manufacturing figures. If the nation’s Manufacturing PMI confirms that expansion accelerated modestly in July it could lend the Australian Dollar underlying support.
Finally, a less-than-impressive Manufacturing PMI from the UK could see the Australian Dollar to Pound Sterling exchange rate reverse declines as the week draws to a close.
UPDATED 09:00 GMT 01 August, 2014
Pound Ends Week Slightly Stronger
The Australian Dollar to Pound Sterling exchange rate slid slightly during the Australasian session as investors hiked their Federal Reserve interest rate hike bets.
The likelihood of the Fed bringing forward its timeline for raising borrowing costs was increased by another positive initial jobless claims report on Thursday and demand for higher-risk assets like the ‘Aussie’ fell accordingly.
The Australian Dollar continued trending in a softer position despite an upbeat Performance of Manufacturing Index for Australia. China’s HSBC Manufacturing PMI also came in above the 50 mark separating growth from contraction, although it did edge down from 52.0 to 51.7 instead of remaining unchanged as forecast.
The Australian Dollar to Pound Sterling exchange rate is currently trading in the region of 1.8171.
Australian Dollar (AUD) Exchange Rates
|Australian Dollar||US Dollar||0.9290|
|Australian Dollar||Pound Sterling||0.5507|
|Australian Dollar||New Zealand Dollar||1.0954|
|US Dollar||Australian Dollar||1.0747|
|Pound Sterling||Australian Dollar||1.8166|
|New Zealand Dollar||Australian Dollar||0.9134|