The British Pound to Australian Dollar (GBP/AUD) exchange rate fell quite significantly at the beginning of Friday’s European session after an official interview with a Standard and Poor’s analyst confirmed that Australia wasn’t in immediate danger of losing its AAA credit rating.
Earlier… The British Pound to Australian Dollar (GBP/AUD) exchange rate continued to trend higher after favourable UK CBI data met heightened fears of iron ore declines and a Standard and Poor’s downgrade.
Earlier… The British Pound to Australian Dollar (GBP/AUD) exchange rate advanced in Thursday’s European session after favourable Confederation of British Industry (CBI) data emerged.
UK Factory Orders Jump to Highest Levels in Six Months, British Pound (GBP) Gains
CBI Trends Selling Prices reached 8 in February, defying forecasts for a further decline to -7 after residing at -6 in January. Meanwhile, CBI Trends Total Orders climbed to 10 in February from January’s 4 and predicted 6. The figures showed UK factory orders hit a six-month high.
CBI economic director Rain Newton-Smith stated: ‘Our manufacturers have more of a spring in their step this month, regaining some of the momentum lost towards the end of last year. The drop in oil prices is good news for the manufacturing sector in the UK, bringing with them lower operating costs, but North Sea producers are clearly suffering.’
However, the CBI is now urging the government to tread carefully when it comes to meeting deadlines for the devolution of Scottish parliament. The CBI suggested that the move could be damaging for the UK economy and cause a stumble in the internal market.
The British Pound to Australian Dollar (GBP/AUD) exchange rate was also offered some support on Wednesday when the UK released highly favourable employment figures. The labour sector saw an increase in Employment Change and Average Weekly Earnings stats while registering a decrease from 5.8% to 5.7% in the Unemployment Rate.
Meanwhile, the Australian Dollar softened in response to credit rating agency Standard and Poor’s backing the Reserve Bank of Australia (RBA) forecast that the federal budget would be susceptible to global economic shock—a factor that could see the Trans Tasman nation’s AAA rating put in jeopardy.
Australia’s largest export, iron ore, has fallen by around 50% in recent months and pressured the Australian Dollar lower. Goldman Sachs evaluated the situation and came to the conclusion that the Australian economy could lose a massive $500 billion Australian Dollars in national income over the next ten years as a result.
Standard and Poor’s sovereign analyst Craig Michaels stated: ‘If there is a significant external shock, it’s very likely that that would have a significant budget impact like it did in the global financial crisis.’
Previously, RBA Governor Glenn Stevens had stated: ‘The budget deficit would go from 2% of gross domestic product to five or six, in a heartbeat. That would happen very quickly if we had a serious downturn.’
British Pound to Australian Dollar (GBP/AUD) Exchange Rate Forecast
The British Pound to Australian Dollar (GBP/AUD) exchange rate could fluctuate on Friday with the release of UK Public Finances, Public Sector Net Borrowing and Retail Sales figures out on Friday.
In addition, any change in commodity prices such as iron ore, gold or copper could influence the Australian Dollar to British Pound (AUD/GBP) exchange rate.
The British Pound to Australian Dollar (GBP/AUD) is trading at 1.9825. The Australian Dollar to British Pound (AUD/GBP) exchange rate is trending in the region of 0.5046