The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate fell to a 1-month low on Thursday as demand for the higher yielding ‘Aussie’ was buoyed by increasing expectations that the European Central Bank will introduce new stimulus measures and the release of positive domestic data.
Sterling was under pressure against the majority of its most traded peers as traders await the Bank of England’s latest interest rate decision. Most economists are forecasting that the central bank will leave interest rates unchanged and policy makers are expected to have become more dovish over the health of the UK economy.
A report released in earlier in the session also showed that UK house price growth slowed again in December.
British house prices rose by 7.8% in the final quarter of 2014 compared with the same period last year, the weakest increase since January last year, said mortgage lender, Halifax.
Domestic Data boosts ‘Aussie’
Data released by the Australian Statistics Bureau showed that the number of homes approved to be built has hit an all-time high due to surge in demand for new apartments and townhouses.
The report showed that approvals for the construction of new homes jumped by 7.5% in November, beating economist forecasts for fall of -3%. Over the course of the month there were 18,245 new approvals granted, the highest number since records began back in the 1980’s.
Following the release of the data, the Australian Dollar moved away from a five and a half year low against the US Dollar and made further gains against the Euro and Pound Sterling.
Despite the release of the report, economists are expecting their forecasts for interest rate movements to remain unchanged.
‘We think the cash rate is going to remain around these levels for quite some time, so you’re getting attractive funding rates, which should be supportive for residential construction. We do not think this data is a game changer, most of the upside was in high residential approvals, so I wouldn’t be surprised if there will be some payback the following month,’ said Tom Kennedy, economist from JP Morgan.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is forecast to remain under pressure throughout the session due to the Bank of England (BoE) interest rate and quantitative easing decision.
