Smaller Uptick in Australian Inflation Boosts Pound Australian Dollar Exchange Rate
The Pound to Australian Dollar (GBP/AUD) exchange rate benefited at the first quarter Australian inflation rate failed to pick up as far as forecast.
While investors had expected to see the inflation rate rise to 1.4% it instead clocked in at 1.1%, showing a smaller increase than anticipated.
Although this still suggests that inflationary pressure has picked up within the Australian economy the Australian Dollar (AUD) failed to take any particular encouragement for the data.
However, over the course of the day the GBP/AUD exchange rate struggled to hold onto its positive footing as the general sense of market risk appetite picked up,
Increasing anticipation for a dovish Federal Reserve policy announcement helped to bolster demand for risk-sensitive currencies such as the Australian Dollar, giving AUD exchange rates a leg up.
Australian Dollar Looks for Boost on Higher Private Sector Credit
Further volatility could be in store for the Australian Dollar ahead of the weekend with the release of the March private sector credit figures.
Forecasts point towards an improvement on both the month and the year, indicating a greater degree of confidence among domestic businesses.
As long as signs continue to point towards a sustained recovery of momentum within the Australian economy AUD exchange rates are likely to find a stronger footing.
On the other hand, if growth in credit fails to pick up as anticipated this could leave the Australian Dollar exposed to another bout of market selling pressure.
Shifting global market sentiment could see AUD exchange rates shedding ground in the days ahead, meanwhile.
With markets expecting to see a solid improvement in the first quarter US gross domestic product data the incentive to favour the Australian Dollar looks set to weaken.
Rising Nationwide Housing Price Index to Offer Pound Exchange Rate Support
Support for Pound Sterling (GBP) may pick up on Friday, meanwhile, on the back of the Nationwide housing price index.
Evidence of fresh strength within the housing market could give the GBP/AUD exchange rate a boost as hopes of a positive second quarter growth performance rise.
After the -0.2% contraction seen in March investors are hoping to see prices return to an upward trajectory, reflecting greater demand within the housing market.
As growth in housing has previously helped to shore up economic activity a positive April figure could add to expectations of growing momentum in the months to come.
However, if prices fail to pick up as anticipated this may put the Pound under fresh selling pressure heading into the weekend.
With GBP exchange rates already buoyed by hopes of an imminent UK economic recovery any signs of faltering growth could weigh heavily on demand for the Pound.