The Australian Dollar ended the week on a firmer footing, following a decent performance for global stock markets on Friday.
Foreign Currency Market Update – GBP / AUD Update
A weakening of the Australian Dollar saw the GBP AUD exchange rate rally to 1.5294 during last Thursday’s session. This was the pair’s highest level this year. The move against the Aussie was partly due to the release of unexpectedly negative minutes from the Reserve Bank of Australia in the early hours of Tuesday morning, in which the Antipodean central bank noted that there was ‘ample scope’ to cut domestic interest rates later in the year, should global economic circumstances merit such a move. An HSBC survey of the state of China’s manufacturing industry, released during Thursday’s Asian session, added to the pressure on the Australian Dollar, showing that activity in this key sector of the Chinese economy had fallen for the fifth month in succession this month. This raised concerns, amongst institutional investors, that a slowdown in output from the ‘workshop of the world’ could trigger a cooling of the global economy. This, in turn, caused a shift out of higher yielding assets, which hurt the Australian currency more than most.
The Bank of England minutes of March’s MPC meeting, caused a short term relief-rally for the Pound, when they were released on Wednesday. The minutes revealed that only two of the nine-man committee had voted for an extension to the £325bn currently allocated to the Bank’s asset purchase scheme. Analysts had feared that one or two of the seven other members might have joined long-term supporters of the credit easing scheme, Adam Posen and David Miles, in voting for an increase.
The Australian Dollar ended the week on a firmer footing, following a decent performance for global stock markets on Friday. This saw the GBP AUD rate pull back to 1.5139 by Friday’s market close. Looking ahead, this week sees a light schedule of Australian data releases, whilst the major risk event of note in the UK comes in the form of Wednesday morning’s finalised Q4 GDP growth numbers. In the absence of any unforeseen shocks, levels on the GBP AUD exchange rate are likely to be determined by movements in global share markets. If the Aussie’s improvement of last Friday is sustained, then the pair’s 27-year low of 1.4555, reached in the middle part of last month, will provide a near-term target.
Summary of major upcoming data releases that we think may move the market.
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – No rate hikes from RBA or BOE…
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – AUD stable as stocks rebound…
- The forward move for GBP AUD was triggered by the news that four large US retail banks had failed the most recent Federal Reserve stress test
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Exchange Rate Hits New Record Low…
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – The Aussie dollar rose strongly in October