The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is forecast to experience volatility next week due to speculation over Greece and a possible interest rate cut by the Reserve Bank of Australia at next month’s policy meeting.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate hit a session high of 1.991 on Friday
As the week ended, the ‘Aussie’ found some support from comments made by RBA Governor Glenn Stevens who said that cutting interest rates may not be very effective to stimulate the nation’s economy and added that he was happy with the current exchange rate. He did however say that; ‘I can certainly think of reasons why it might go down some more.’
The currency also received some support from improved market sentiment. Oil prices edged higher and Gross Domestic Product data out of the Eurozone came in better than forecast, adding to signs that the global economy is shrugging off a slowdown.
GBP/AUD Forecast
Looking ahead to next week the Australian Dollar is likely to come under pressure as the markets once again focus on events in Europe and Asia.
On Monday, investor attention will be fixed on the crunch meeting of European Finance Ministers as they seek to end the current Greek crisis. If no deal can be reached between the Greek government and its creditors, concerns will increase that the nation could default on its loans and potentially leave the Eurozone.
A lack of market moving data out of the UK and the closure of the US markets because of the President’s Day National Holiday may limit volatility.
Tuesday will see volatility for the Australian Dollar as the RBA releases the minutes from its February policy meeting. Any hint that policy makers are considering to cut interest rates again in March will weaken the currency. Alternatively, if the minutes rule out such a move, than the ‘Aussie’ could strengthen.
Also in focus will be UK Inflation data, which is forecast to show that inflation in the nation fell again in January. If the data shows that the inflation rate has slipped into negative territory, then the Pound could tumble.
Midweek will see the publication of UK employment data. Another strong report and the Pound will likely receive support.
Also released will be the Bank of England’s policy meeting minutes for February.
Average earnings data released on Thursday could also offer support to Sterling.
The Australian Dollar could receive support on Monday from New Motor Vehicle Sales data.
Investors should also be aware of the Bank of Japans interest rate decision midweek as that could affect Asian markets.
Events in Ukraine could impact upon market sentiment and weigh upon riskier commodity based assets such as the ‘Aussie’.
On Sunday the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trading in the region of 1.9812
