The Pound (GBP) to Australian Dollar (AUD) experienced mixed trading on Wednesday as investors sat back and waited for the release of US data and as market sentiment was weaker on mounting concerns over global economic growth.
On Tuesday the International Monetary Fund (IMF) downgraded its global growth forecast for both 2014 and 2015 as it blamed ongoing weakness in the Eurozone and a weaker than expected recovery in Japan for the slowing of the world’s economy.
The agency now sees 2014 global growth of 3.3% and 2015 growth of 3.8%, a decline of 0.1% for 2014 and 0.2% for 2015 from forecasts made in July.
Sterling was unable to make gains despite the release of a report, which showed that house prices in the UK increased by 0.6% last month, beating economist forecasts for a gain of 0.2%. On a year on year basis, house prices rose 9.6%, matching expectations but saw a slight dip from the 9.7% annual figure seen in the preceding month.
The Australian Dollar meanwhile was under pressure from the release of data out of China, which showed that service sector activity in the world’s second largest economy fell in September.
The HSBC compiled Services PMI fell from August’s figure of 54.1 to 53.5 in September, a number, which was below economist forecasts for a reading of 53.8.
August Aussie Jobs Data Changed
The currency also saw some movement after the Australian Statistics Bureau said that it had dropped its August jobs growth report, as it was too good to believe. The report said that 121,000 new jobs were created in August, a figure that economists doubted as the preceding months figure showed a strong rise in the unemployment rate.
The Bureau instead said that it would instead use its raw data, which showed that the economy created 32,000 jobs in the month, a figure that was more acceptable and believable to traders. Employment data for September is due to be released on Thursday.
‘Now that we’ve got a more plausible starting point, it makes it more interesting in a way really because you don’t have to be distracted by this extraordinary August number, It’s still going to be messy and the unemployment rate, who knows, so there’s still a lot of uncertainty over the release tomorrow. The employment report is probably the most reliable source of volatility for the Aussie,’ said Sean Callow, a strategist from Westpac Banking Corp.
Pound Sterling to Australian Dollar Exchange Rate Forecast
Depending on the contents of the US Federal Reserve policy meeting minutes, we could see the Pound advance against the ‘Aussie’. Signs that policy makers are adopting a more hawkish stance will weigh upon the ‘Aussie’ and other similar currencies.
Also of interest to traders will be the Bank of England’s latest Interest Rate and quantitative easing decisions. Again, if policy makers take a hawkish stance then the Pound will rise.
UPDATE
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8206.
Despite Australian domestic data printing mostly negatively on Thursday the ‘Aussie’ (AUD) has made significant gains against the Pound.
This is likely a result of the Federal Reserve minutes from the latest policy meeting which were seen to be particularly dovish. The minutes showed that the Fed policymakers worry about the strength of the Dollar and the weakness of foreign economic growth. Policymakers stressed ‘patience’ in waiting for a rise in interest rates.
The dovish speech has sent the US Dollar crashing lower and risk-sensitive currencies, such as the ‘Aussie’ Dollar, were pushed up.
Sterling has declined against the majority of its most traded peers after House Price Balance data declined beyond the median market forecast.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8800 ,
Australian Dollar,,Pound Sterling,0.5471 ,
Australian Dollar,,Euro,0.6946 ,
Australian Dollar,,New Zealand Dollar,1.1249 ,
US Dollar,, Australian Dollar ,1.1365 ,
Pound Sterling,, Australian Dollar ,1.8281 ,
Euro,, Australian Dollar ,1.4389 ,
New Zealand Dollar,, Australian Dollar ,0.8889 ,
[/table]
