Robust Australian Data Failed to Prevent GBP AUD Exchange Rate Rally
While Australian private sector credit was found to have risen 5.4% on the year in November this was ultimately not enough to keep the Australian Dollar (AUD) on a stronger footing. Market risk appetite weakened during the final trading session of 2016, with investors engaging in a round of profit taking against higher-yielding currencies. Thus, even though the latest US data proved discouraging the Pound Australian Dollar (GBP AUD) exchange rate rallied ahead of the weekend.
Confidence in the Pound (GBP) improved, meanwhile, with market speculation over the future of the UK’s relationship with the EU quieting down. Thursday’s Nationwide house price index data also offered encouragement to GBP exchange rates, suggesting that the domestic economy is in a healthier state than previously thought. With trading volumes largely limited Sterling enjoyed greater upwards momentum, even though the underlying trend remained bearish.
GBP AUD Exchange Rate Forecast: Australian and UK PMIs in Focus
The appeal of the ‘Aussie’ is likely to remain muted thanks to the hawkish rhetoric stemming from the US, with the strength of the US Dollar (USD) weighing heavily on commodity prices. A faster pace of monetary tightening from the Federal Reserve could encourage the Reserve Bank of Australia (RBA) to return to an easing bias in the near future. Should Australian data fail to impress then the antipodean currency can be expected to soften further.
Expectations are not positive for December’s Australian Manufacturing and Services PMIs, both of which are forecast to have weakened markedly on the month. Signs of weaker economic activity are unlikely to encourage demand for the Australian Dollar, increasing the odds of another interest rate cut from the RBA.
On the other hand, the latest raft of UK PMIs are predicted to point towards a dip in sector growth. While all three measures are expected to remain in positive territory any moderation in activity could put downside pressure on the Pound, particularly if the service sector is seen to underperform. However, if signs continue to point towards resilience within the UK economy then the GBP AUD exchange rate could extend its recent gains further.
Current Interbank Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was on an uptrend at 1.70, while the Australian Dollar Pound (AUD GBP) pairing was slumped in the region of 0.58.
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