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

Currency

By on June 18th, 2012.
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Pound to Australian Dollar Exchange Rate Forecast - The Sterling to Australian Dollar exchange rate continued to edge lower as last week's session drew to a closeLooking ahead to this week, the minutes of the latest Reserve Bank of Australia board meeting, due for release in the early hours of tomorrow morning, provide a key risk event.

Foreign Currency Market Update – GBP / AUD Update

The Sterling to Australian Dollar exchange rate continued to edge lower as last week’s session drew to a close. Friday saw the pair trade down to its lowest level for a month at 1.5446 as global stock markets moved forward, benefitting the risk-sensitive Australian Dollar. The final session of last week also proved to be a disappointing one for the Pound, as official UK government figures revealed that Britain’s trade gap had reached its highest level since 2005.

Global investors’ focus settled on Greece’s parliamentary election during the weekend close. The results of the popular ballot have brought a positive result for pro-bailout parties, with it now looking likely that the centre-right ‘New Democracy’ party will be in a position to form a euro-friendly ruling coalition with the Pasok party. The initial response to the news from market participants was positive, sending Asian stocks sharply higher last night. However, gains for Europe’s bourses this morning have been less pronounced, suggesting that although a Greek exit from the euro is now unlikely in the near-term, the rising cost of borrowing for Italy and Spain’s governments remains a concern. These fears have stopped the Australian Dollar making any further headway against the Pound in early trading today, as the GBP AUD exchange rate settles in the 1.5500s.

Looking ahead to this week, the minutes of the latest Reserve Bank of Australia board meeting, due for release in the early hours of tomorrow morning, provide a key risk event. The RBA cut its key lending rate by 25 basis points at its June meeting, so it seems a fair assumption that the minutes will be downbeat in tone, placing further selling pressure on the Aussie. However, the minutes of June’s Bank of England policy meeting could more than cancel out the positive effects which any negative RBA comments have on the GBP AUD exchange rate, if they suggest that the nine-man committee are considering further Quantitative Easing for the UK economy later this year. Such an outcome could see GBP AUD continue to trend downwards towards mid-February’s multi-decade low of 1.4555.

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