The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate ended last week in a softer position as the British currency entered into bearish relationships with the majority of its counterparts.
The appeal of the Pound lessened over the course of the five days as the odds of the Bank of England (BoE) increasing interest rates by November took a bit of a bashing.
Uninspiring UK Consumer Confidence, House Price and Manufacturing data all contributed to the Pound’s broad-based weakness and the Australian Dollar was able to maintain a slightly stronger position against its rival even as a measure of the Chinese Services sector came in below estimated levels.
Last week China’s Manufacturing PMI impressed (climbing from 51 to 51.7) but the nation’s Non-Manufacturing PMI tumbled to a six-month low of 54.2 in July, still above the 50 mark separating growth from contraction but down from 55.0 in June.
The decline was largely due to the adverse impact of a weaker domestic housing market and inspired this response from a representative from the Logistics Federation; ‘Real estate continued to soften, reflecting a thin market in the low season, while the range of price discounting widened.’ However, he did add; ‘The decline in the index isn’t large and overall, markets are stable.’
On Sunday the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in the region of 1.8055.
Pound Sterling to Australian Dollar Exchange Rate Forecast
There are several potentially influential economic reports for Australia to be aware of over the next few days, including the nation’s AiG Performance of Services Index for July, the ANZ Weekly Consumer Confidence Index, Australian Trade Balance figures, the AiG Performance of Construction Index, Australia’s Employment data and Home Loans figures. China’s trade data and services PMI will also have an impact on the Australian Dollar.
If these reports impress, the Pound Sterling to Australian Dollar exchange rate could extend declines in the days ahead.
However, the Reserve Bank of Australia is also scheduled to deliver its interest rate decision on Tuesday.
The central bank is unlikely to make any alterations to policy and if it maintains that interest rates will remain steady for the time being the ‘Aussie’ could benefit.
That being said, the RBA has had a habit of trying to talk down the Australian Dollar recently, and if the central bank once again stresses the detrimental effect of a strong local currency the GBP/AUD pairing may just reverse previous losses.
The UK’s economic reports, including the NIESR growth estimate, will also be worth noting.
We forecast that the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate will experience volatility as the week progresses.
UPDATED 16:45 GMT 04 August, 2014
The Pound Sterling to Australian Dollar Exchange Rate Unchanged
The GBP/AUD exchange rate was little changed on Monday following the release of the UK’s Construction PMI for July.
The pairing had previously softened following the publication of Australia’s unexpectedly strong retail sales figures but the Pound managed to recover.
Overnight the Reserve Bank of Australia is due to deliver its interest rate decision.
If the central bank attempts to talk down the ‘Aussie’ the Pound Sterling to Australian Dollar exchange rate could surge.
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