Australian Home Loans Figure Failed to Meet Forecast, ‘Aussie’ (AUD) Remains Strong with Fresh Round of Risk Demand
Although overnight Australian lending data was less positive than hoped, with the August Home Loans figure showing an increase of 2.9% rather than the expected 4.7%, the ‘Aussie’ (AUD) has nevertheless remained strong. This is in no small part attributable to the dovishness of the recently released Federal Open Market Committee (FOMC) meeting minutes, the tone of which saw the US Dollar (USD) soften and risk appetite increase. As such, the GBP/AUD exchange rate has remained in a slump around 2.1079.
Earlier…
Risk appetite appears to be dying back today as profit taking drives down the ‘Aussie’ (AUD) to the benefit of the GBP/AUD exchange rate.
Commodity Rally Helped Push GBP/AUD Conversion Rate to Monthly Low in spite of Strengthened UK Industrial Production
While the Australian Construction PMI proved less than encouraging, sliding from 53.8 to 51.9 to indicate weakening domestic growth, the ‘Aussie’ (AUD) remained on bullish form throughout trading on Wednesday. Buoyed by rallying commodity prices the antipodean currency climbed against the majority of rivals, still reaping the rewards of the freshly agreed Trans-Pacific Partnership trade deal. As indicators appeared to point towards a more positive long-term outlook for the Australian economy and the odds of an imminent Fed interest rate hike continued to diminish the GBP/AUD exchange rate naturally slumped, striking a monthly-low of 2.1161.
Nevertheless, general sentiment towards Sterling (GBP) remained positive as the UK Industrial Production data for August bettered estimates. With the NIESR Gross Domestic Product Estimate also coming in as expected, holding steady at growth of 0.5%, the nation’s economy appeared to be weathering some of the more negative global headwinds.
GBP/AUD Shored up By Profit Taking as Markets Await Bank of England (BoE) Meeting Minutes
The ‘Aussie’ has lost some of its appeal on Thursday, however, as a weaker opening to the Shanghai stock market triggered a round of profit taking. This offered some support to the GBP/AUD pairing, in spite of the Pound also beginning to soften in the wake of an unimpressive RICS House Price Balance. Some of this caution towards Sterling is likely due to the upcoming Bank of England (BoE) Rate Decision and accompanying meeting minutes. While policymakers are not expected to move towards an interest rate rise at this session, the tone of their comments will be of significant interest to traders. Signs of continued confidence and a commitment to a 2016 rate increase would no doubt prompt the GBP/AUD exchange rate to make further gains.
GBP/AUD Exchange Rate Forecast: Upcoming Australian Loan Data Could Provide Rallying Point for the ‘Aussie’
Overnight the Australian Home Loans and Investment Lending figures could provide some fresh support for the antipodean currency, although shortfalls on the forecast improvements may spur a further decline. Should the domestic economy provide some robust signals of growth, however, the ‘Aussie’ could stand to strengthen significantly.
Friday will also see the publication of the UK’s Visible Trade Balance, which is expected to show a narrowing of the national deficit after the previous month’s unexpected expansion. A strong printing here could see renewed buoyance for the Pound, particularly if the BoE minutes proves more hawkish.
Current GBP, AUD Exchange Rates
At time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was on an uptrend at 2.1344, while the Australian Dollar to Pound Sterling (AUD/GBP) pairing was slumped in the range of 0.4684.
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