Foreign Currency Market Update – GBP / AUD Update
The Australian Dollar made a concerted comeback against the Pound during last week’s session, taking the GBP AUD exchange rate from 1.5880 on Sunday night to as low as 1.5570 last Thursday. The GBP AUD exchange rate had looked overbought at rates close to 1.6000, so a technical move lower was to be expected as speculators shut down their positions and ‘took profit’. However, the sharp improvement against the Pound from the ‘Aussie’ also has some fundamental drivers behind it. Tuesday’s UK Industrial and Manufacturing Production data came out weaker than anticipated, suggesting that the British real economy is continuing to struggle to pick itself up off the ground following the decimating effects of 2007′s global credit crunch. Australian Employment data, released in the early hours of Thursday morning, also served to send the GBP AUD rate lower, revealing that a healthy 14,500 new positions had been generated in Australia’s domestic economy during the month of September – this was well ahead of expectations of a 5,000 increase.
As this week’s session gets underway, the GBP AUD exchange rate is once again threatening to head lower. Saturday’s Chinese trade data showed that exports by Asia’s leading economic superpower increased by a mammoth annualised 9.9% last month; this was almost twice the level of analysts’ expectations, suggesting that the global economy may be in ‘less bad’ shape than had previously been anticipated. The early hours of this morning brought the release of more Chinese figures – this time the headline CPI inflation data for September, which showed that the rate of price rises in the nation’s economy continues to cool. These numbers led to speculation that Chinese policymakers may be about to embark on a further loosening of monetary policy. Stock markets have gained ground today in anticipation of such an occurrence, providing a solid platform from which the risk-sensitive ‘Aussie’ could make further gains, providing tonight’s Reserve Bank of Australia minutes do no paint too gloomy a picture of the Australian and world economic situation. Continued support for the Australian Dollar could see GBP AUD trend downwards towards August’s key interim floor of 1.4711. Conversely, if global data releases suggest that the global economic outlook is deteriorating, a renewed move higher cannot be ruled-out for GBP AUD, with consecutive closes above 1.5888 setting up the possibility of a first visit to the 1.6000s since May for the pair.
Summary of major upcoming data releases that we think may move the market.
- 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: Sterling continued its recent dismal run against the Australian Dollar during last week’s session
- Sterling surged against the Australian Dollar during last week’s session
- The Pound climbed to its highest level for fourteen weeks against the Australian Dollar
- The Australian Dollar came under pronounced selling pressure at the start of last week’s session