Although the prospect of today’s UK inflation report weighed on the Pound overnight and saw the British asset slump against the US Dollar and fluctuate against the Euro, Sterling was able to strengthen against a broadly bearish ‘Aussie’ as concerns from both home and away took a toll.
The Australian Dollar was trading in the region of 0.5860 against the British Pound as of 10:10 am GMT
The GBP/AUD pairing was able to rally as a report revealed that Australian business confidence plummeted by the most for over two years.
A sentiment gauge compiled by National Australia Bank Ltd dropped from 12 in September to 5 in October while a measure of business conditions held at -4.
According to a NAB currency strategist, ‘The market has taken on board that things are improving perhaps not only not as fast as people thought, but not at all. The sentiment at the moment is a little bit bearish on the Aussie, which essentially means that news that can be sees as negative is likely to resonate.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate hit a high of 0.5888
Concerns regarding China’s growth prospects also weighed on the AUD/GBP pairing as a four-day communist party summit came to a close in Beijing.
During the gathering hundreds of Chinese officials met to outline an economic plan for supporting the growth of the world’s second largest economy.
However, ‘Aussie’ declines were limited by the news that NAB revised its forecast for a further Reserve Bank of Australia rate cut. The institution now believes that a slower climb in unemployment will prevent the RBA from issuing a rate cut until May.
That being said, the Australian Dollar still fell to a six-week low against its US counterpart.
Overnight the New Zealand Dollar also broadly softened as a result of the meeting in China. The ‘Kiwi’ had previously been supported by a 1.6 per cent increase in the domestic REINX house price index.
But further GBP/AUD movement occurred following the publication of UK inflation data.
With UK inflation slowing by more than expected last month, dipping to its lowest level for over a year, the Pound extended its decline against the US Dollar and pared its advance against the ‘Aussie’.
As one economist for Citigroup Inc. observed; ‘Even with the rapid upturn in the economy, UK inflation is likely to undershoot consensus and Monetary Policy Committee forecasts in coming months. Low inflation should allow monetary policy to continue to support a strong economic recovery in 2014-15.’
Later today additional ‘Aussie’ fluctuations are likely to occur as a result of Australian Westpac consumer confidence data. Tomorrow’s UK employment figures will also be of interest.
Current Australian Dollar Exchange (AUD) Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9326 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6975 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5860 >
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1344 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0723 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4342 >
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.7064 <
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8822 >
Correct as of 10:10 am GMT
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