The GBP AUD exchange rate broke to another near-term high last week

Currency

By on May 28th, 2012.
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Pound to Australian Dollar Exchange Rate Forecast - The GBP AUD exchange rate broke to another near-term high last weekThe GBP AUD exchange rate confirmed the uptrend

Foreign Currency Market Update – GBP / AUD Update

The GBP AUD exchange rate broke to another near-term high last week, touching 1.6187 on Wednesday. This was the pair’s highest level for seven and a half months, eclipsing the previous top-of-the range rate of 1.6168, which it visited on 15th May.

The upwards move for GBP AUD was once again driven by Australian Dollar weakness, which in turn was triggered by concerns emanating from the eurozone. Investors’ fear levels peaked in the middle part of last week’s session following the latest eurozone crisis summit, which concluded in Brussels late on Wednesday night. The meeting yielded nothing but platitudes from the assembled European leaders on how the region should aim to promote internal economic growth, whilst pressing on with wholesale austerity measures. More worryingly, the summit saw renewed fissures emerge between German policy-makers and the rest of the region’s leaders on whether whole-of eurozone bonds, backed by the ECB, should be issued in an attempt to extricate debt-burdened peripheral states from their ongoing debt crisis. The ‘rest of eurozone’ bloc was led by new French President Francois Hollande, causing commentators to speculate over the emergence of a potentially damaging Franco-German split in the troubled region. Investors did not respond well to these rumours, moving their assets out of riskier investments including the Australian Dollar.

However, GBP AUD could not maintain its upward momentum for the remainder of the week and was weighed down by negative UK data releases as the session progressed. Wednesday’s weaker-than-anticipated British retail sales numbers for April and Thursday’s downwardly-revised UK GDP data for Q1 stood out as low-lights. These figures saw GBP AUD spend much of the 48-hours leading up to Friday’s close languishing back in the 1.50s once again.

The fact that GBP AUD breached the 1.6000 level for the first time this year on 8th May and has only managed to limp 187 points higher during the intervening 20 days, suggests that its recent forward move may be running out of steam. This sentiment is accentuated by a continued downward drift for the pair at the start of this week’s session, which has seen GBP AUD exchange rate trade down into the high 1.58s early today, close to three cents below last Wednesday’s high. For this reason, clients needing to purchase Australian Dollars in the near-term should consider taking care of half of their requirement sooner rather than later in order to guard against further downside for the pair.

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