The Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate is Forecast to continue to trade higher as a strengthening US Dollar and concerns over tumbling iron ore prices and the Chinese economy continue to weaken the ‘Aussie’.
As Wednesday’s session progressed the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced to trade at 1.86 after being supported by a better than forecast UK services PMI data.
The data showed that activity in the UK’s service sector increased more than forecast in November. The PMI increased to 58.6 last month from a reading of 56.2 in October. Analysts had expected the index to rise to 56.6 in November.
Earlier on Wednesday the Pound to Australian Dollar (GBP/AUD) exchange rate soared to its highest level in 9-months as data showed that the Australian economy expanded at a slower than forecast rate and the nation entered an income recession.
According to the Australian Bureau of Statistics, gross domestic product (GDP) showed that the Australian economy expanded by just 0.3% in the third quarter and by just 2.7% on an annual basis disappointing economist expectations for a quarterly rise of 0.7% and a yearly rise of 3.1%.
Real net national disposable income, which measures what Australian governments, businesses and households receive in exchange for goods and services, contracted for the second quarter in succession, which is the normal definition of a recession.
Australian Dollar to US Dollar Tumbles to Fresh 4-1/2 Year Low
Against the US Dollar, the Australian Dollar tumbled to a fresh 4-1/2 year low after the report was released. The ‘Aussie’ also declined against the Euro but further losses were restrained due to the release of more disappointing data out of France and Germany.
‘Soft income growth will weigh on profits, wages and public revenues, and flow through to softer consumer spending, business investment and public demand. Moreover, the drag from the wind-back in mining investment still has a long way to run and is likely to be much sharper over coming quarters as large scale LNG projects approach completion,’ said Felicity Emmett, chief economist from ANZ.
The weak GDP report will add to pressure on the Reserve Bank of Australia to cut interest rates over the next year. Goldman Sachs and Deutsche Bank AG are now both forecasting that the central bank will be forced to cut rates as economic growth slows. Both banks are expecting rates to be cut to a new record low level of 2% over the course of next year.
Pound Sterling to Australian Dollar Exchange Rates-
The Pound to Australian Dollar Exchange Rate is trading in the Region of: 1.8710
The Pound to Australian Dollar Exchange Rate hit a session High of 1.8755
The Pound to Australian Dollar Exchange Rate hit a session Low of 1.8622
