The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate recorded losses in the early part of Friday’s European session after UK Construction Output contracted by a whopping -2.2% in October.
The annual figure was pulled to 0.7% from 6.7% after forecasts for a 0.7% monthly rise in October failed to materialise. The ecostat offers further support to the hypothesis that the UK housing market is cooling—a development that see’s investors adjust their bets for an interest rate hike by the Bank of England (BoE).
Earlier in the year, the central bank was coming under increasingly pressure from a string of favourable UK figures, better growth forecasts and a heated housing market. However, as property cools and cracks in the UK economic recovery become evident, the central bank is offered more time to stall before hiking rates.
Bank of England (BoE) Announces Greater Transparency
The Bank of England took interesting action this week when Governor Mark Carney announced that the way the public receives information from the central bank will be changing.
The BoE plans to remove the tense few weeks dividing Monetary Policy Committee (MPC) meetings and the release of the meeting minutes. Furthermore, the central bank will be cutting meetings down from 12 to 8 and releasing full transcripts of gatherings eight years after they take place.
Economist Alan Clarke commented: ‘Putting all these announcements together gets rid of a lot of uncertainty and speculation, so full marks to Carney on that. You may still have the same risk, that people get the wrong end of the stick until they get a chance to look at the detail. It may be it takes the market a few days to absorb the message after Super Thursday.’
Meanwhile, the Australian Dollar initially depreciated after the Reserve Bank of Australia (RBA) stated that the currency was likely to fall in the near future. However, Stevens also stated that the central bank needs to tread with caution when it comes to language surrounding interest rate cuts.
Stevens stated that the economy is still performing and the RBA doesn’t want to damage confidence.
Stevens stated: ‘If at some point we can be more helpful for confidence by doing something different, then obviously that will be on the table, and we will take a fresh look at all these things in the New Year. I have felt that thus far that has been the sensible thing for us to do. And for more confidence we probably need some other things to go right as well, things that we obviously can’t control.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate could be in for an interesting day on Tuesday with the release of the latest RBA meeting minutes as well as the highly influential UK Consumer Price Index (CPI).
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 1.8988. The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has seen market movement of +0.42% and resides at 0.5270.