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Pound Sterling to Australian Dollar (GBP/AUD) Forecast: Exchange Rate Softer on US Fed Comments

Australian Dollar (AUD) bank notes

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened on Thursday as the ‘Aussie’ received support from dovish comments made by the Federal Reserve. Positive retail sales data out of the UK however supported Sterling against most of its major peers.

On Wednesday the Pound to Australian Dollar (GBP/AUD) exchange rate continued to strengthen as ‘Aussie’ remained under pressure after the minutes of the RBA’s December policy meeting released on Tuesday showed that board members will continue to hold interest rates at record lows for an extended period. The GBP/AUD exchange rate is forecast to strengthen further later in the session due to the Federal Reserves interest rate announcement.

The Pound to Australian Dollar (GBP/AUD) exchange rate rallied later on Tuesday as riskier commodity based assets suffered a sell-off ahead of Wednesday’s US Federal Reserve policy meeting.

Tumbling oil and iron ore prices in particular weighed on the ‘Aussie’ and allowed the Pound to advance  against most of its riskier peers.

Earlier the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened on Tuesday morning after the minutes from the Reserve Bank of Australia’s December policy meeting reiterated the banks stance on period of stability for interest rates.

Aside from reaffirming its pledge to keep interest rates stable at the record low level of 2.5% the minutes were in reality rather dull as they did not show any sign of tension between policy makers and offered no mention of the possibility of a rate cut.

‘Board members noted that market expectations implied some chance of an easing of policy during 2015 and discussed the factors that might be producing such an expectation. Members considered that the most prudent course was likely to be a period of stability in interest rates,’ said the only interesting part of the RBA minutes.

Ending of Martin Place Siege Supported ‘Aussie’

The ‘Aussie’ received some support after the 16-hour siege at a cafe in the centre of Sydney ended. The incident ended when police stormed the cafe, which resulted in three people dying including the hostage taker.

The gunman, Man Haron Monis a 50-year-old Iranian refugee and self-styled religious leader who held out in the cafe for more than 16 hours – was shot and pronounced dead after being taken to hospital, New South Wales police said.

As news broke of the ending of the siege, the ‘Aussie’ found some support.

Chinese Data Shrugged Off

The Australian Dollar was able to make gains despite the release of worse than expected data out of China. The report showed that China’s HSBC Flash Manufacturing Purchasing Managers Index slipped into contraction territory of 49.5, a drop from November’s reading of 50.0, and was worse than economist forecasts for a figure of 49.9.

Pound Sterling (GBP) Exchange Rate Falls on Inflation Data

The Pound weakened after data showed that UK inflation fell to its lowest level since 2009. The report showed that the country’s inflation rate fell to just 1.0% in November from the 1.3% recorded in the preceding month. On a monthly basis inflation declined from 0% to -0.3%. The biggest falls in prices were seen in the transport and recreation sectors.

The Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rates

The Pound Sterling to Australian Dollar exchange rate hit a session high 1.9193

The Pound Sterling to Australian Dollar exchange rate hit a session low 1.9013

The Pound Sterling to Australian Dollar exchange rate was trading in the region of 1.9118

 

 

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