There had been some room for cautious optimism for clients needing to buy Australian Dollars in the middle part of this month.
Foreign Currency Market Update – GBP / AUD Update
The past week has seen the GBP AUD exchange rate continue the seemingly inexorable slide which it has been on since May’s brief visit above 1.6000. The move to the downside has taken the pair into the lower part of the 1.4900s during today’s session – this is the lowest level on GBP AUD since the middle part of March – as investors continue to price-in last Wednesday’s dire UK Quarter 2 GDP growth data.
There had been some room for cautious optimism for clients needing to buy Australian Dollars in the middle part of this month, as Spanish and Italian bond yields spiralled, triggering a move out of riskier asset classes including the Australian Dollar. However, European policymakers have made a concerted effort to ‘say the right thing’ during recent sessions; European Central bank President Mario Draghi led the way at the end of last week, when he asserted that the ECB stands ready to do, ‘whatever it takes to preserve the euro’. Draghi’s words were re-enforced by Jean-Claude Juncker, head of the eurogroup of Finance Ministers, in a series of interviews with French and German newspapers published over the weekend. Juncker hinted that the European bail-out facility is ready to make emergency funding available to Spain’s government in order to help it prop up the country’s creaking finances. Investors will learn more about eurozone leaders’ response to Spain’s dizzyingly high debt costs on Thursday, when the ECB makes its latest monetary policy announcement. Market rumours suggest that Draghi may use this set piece occasion to announce that the ECB is to recommence its policy of buying up the bonds of debt burdened states. Such a revelation would be likely to settle market participants’ nerves, providing more good news for the Australian Dollar, which could potentially see GBP AUD make a renewed run at February’s 27-year low of 1.4555.
Summary of major upcoming data releases that we think may move the market.
- The Pound to Australian Dollar has been on a rollercoaster ride over the past week
- The past seven days have seen Sterling buck its recent run of losses against the Australian Dollar
- Pound to Australian Dollar Forecast: The latter part of last week brought significant volatility for the Australian Dollar
- Pound to Australian Dollar Forecast: The Sterling to Australian Dollar exchange rate continued to edge lower as last week’s session drew to a close
- Pound to Australian Dollar Forecast: The Pound reached a 2-week high against the Australian Dollar