Having finished last week in a strong position thanks to a hawkish speech given by Bank of England Governor Mark Carney; Sterling has declined fractionally on Monday after British data printed disappointingly. The ‘Aussie’ (AUD) Dollar has rapidly declined over the past week after several Reserve Bank of Australia policymakers gave dovish speeches about overvaluation. Monday has seen further declination after Tom Albanese, former head of Rio Tinto Group, suggested that iron ore is likely to remain low for a sustained period of time.
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8592.
Last week was a bumper week for the Pound Sterling exchange rate. An initial surge was provoked by the Unionist victory in the Scottish independence referendum. Further appreciation was caused by BoE Governor Mark Carney after he gave a speech on Thursday. In the speech he suggested that the majority of the prerequisites for normalising monetary policy have now been met and a benchmark interest rate increase is expected in the near-future.
Those invested in the Australian Dollar would have been irritated by the speeches from RBA officials over the course of last week. In particular, Governor Glenn Stevens’ speech aided the ‘Aussie’ downfall after he suggested the possibility of using macro prudential tools to curb rising house prices in Australia’s two biggest cities.
The Pound Sterling to Australian Dollar exchange rate has hit a low today of 1.8570.
Monday’s British data has been a little disappointing and has softened the Pound fractionally against many of its most traded currency peers. The Bank of England Consumer Credit report showed a declination beyond the median market forecast of a drop from £1.10 billion to £0.85 billion, with the actual data coming in at £0.898 billion. Mortgage Lending also fell despite expectations of maintaining the previous figure of £2.3 billion, with the actual data showing a declination to £2.28 billion. Mortgage approvals dipped despite the market consensus of a rise from 66, 600 to 69,000, with the actual data having dropped to 64, 210.
Although there was nothing in terms of Australian economic data on Monday, the ‘Aussie’ Dollar has depreciated against the majority of its most traded currency competitors. This is as a result of Albanese, intimating that there is a distinct possibility that iron ore will continue to hold a low valuation for a sustained period. ‘At $80, the prices are at a pain point for many higher-cost producers,’ said Albanese, who headed Rio from 2007 to 2013. ‘In this environment, you now have supply probably in excess of demand. It doesn’t take much to drive prices lower’.
Forecast for the Pound to Australian Dollar Exchange Rate
Despite the decline initiated by Monday’s data; Sterling is very likely to hold its ground against the Australian Dollar. Given the issues with Australia’s biggest export commodity and continued risk aversion strategies amid geopolitical tensions, it is likely that the ‘Aussie’ will continue to trend lower for some time.
The Pound Sterling to Australian Dollar exchange rate has reached a high today of 1.8676.
UPDATE
Although China’s HSBC Manufacturing PMI for September was negatively revised, the Australian Dollar managed to gain on the Pound during the South Pacific session.
The GBP/AUD exchange rate fell by over 0.2% in response to some poor UK data.
The nation’s Consumer Confidence Index unexpectedly slid from 1 to -1 and the Nationwide House Price report detailed a significant slowing in price gains.
House prices increased by 0.1% on a month-on-month basis in September, a far cry from the 0.5% rise forecast.
Meanwhile, Australia’s Roy Morgan Weekly Consumer Confidence gauge advanced from 112.9 to 113.7.
Today’s UK second quarter growth data could have an impact on GBP/AUD trading if the initial figure is revised.
