The Pound showed signs of steadying its ship against the Australian Dollar last week. This was largely due to an easing of support for the risk sensitive AUD, rather than any pronounced support for Sterling.
Foreign Currency Market Update – GBP / AUD Update
The past seven days have seen Sterling buck its recent run of losses against the Australian Dollar. This saw the GBP AUD exchange rate close the week’s session up against the Aussie, but the intraweek movement for the pair was more significant – it was the first week for nine weeks that GBP AUD had failed to break down to a new near-term low. Indeed, the Pound even managed to end the week on the front foot against the AUD, with a strong performance on Friday, which saw the pair approach the 1.4900 level. This move has continued into this week’s session, taking the GBP AUD exchange rate back above 1.4900 in early trading today.
Interest rate expectations played a major part in determining the relative strength of Sterling and the Aussie last week. The Reserve Bank of Australia’s minutes, released in the early hours of last Tuesday morning, stated that Australia’s central bank considers that there is scope to cut domestic interest rates later in the year, if economic circumstances necessitate. This came as a surprise to many analysts, who had considered the RBA’s decision of earlier this month to hold rates at 4.25% as tacit confirmation that Australia’s ultra-loose monetary policy stance was set to be maintained into the medium term. Meanwhile, the latest Bank of England MPC minutes, released last Wednesday, showed that two of the nine-man committee had voted for a £75bn increase in the Bank’s QE programme. This caused investors to factor-in a higher percentage chance of an expansion of the scheme later in the year, causing downside pressure for the Pound. Later in the week, the second estimate of UK economic growth for Q4 2011 printed at -0.2%, in line with the initial flash estimate of last month.
*Denotes the importance of the data item *** being the highest level.
** This month’s Nationwide House Price Survey is penned in for release in the early hours of Tuesday morning in the UK. It’s expected to show an annualised increase of 0.3% in British house prices.
** February’s GfK Consumer Confidence Survey is released in the UK in the early hours of Wednesday morning – an improvement on January’s -29 figure is anticipated.
** Later on Wednesday morning comes the release of British Mortgage Approval data for January.
** UK PMI Surveys for January for the manufacturing and construction sectors are due for release on Thursday and Friday respectively. Both are expected to show a slight weakening off from December’s figures.
** The latest HIA New Home Sales numbers are released in the early hours of Wednesday morning in Australia.
** Australian Retail Sales data for January are also released early on Wednesday morning, with a return to positive territory expected following December’s monthly contraction of 0.1%.
The Pound showed signs of steadying its ship against the Australian Dollar last week. This was largely due to an easing of support for the risk sensitive AUD, rather than any pronounced support for Sterling. Significant uncertainty remains in the global economy, with investors remaining far from convinced regarding the veracity of Greece’s bail-out. Worries over violence in Syria and the potential that Iran will destabilise global oil supplies also persist. If such situations escalate, then there is the potential that institutional investors will shift out of riskier assets, hurting the Aussie and taking the GBP AUD exchange rate higher. The longer the pair holds above its 27 year low of 1.4555, which it reached on 15th February, the more important this level becomes, however consecutive closes above 1.5679, (the near-term high reached in the week preceding last Christmas), would be required to start calling this as any kind of bottoming pattern.
- Pound Sterling, the Euro and US Dollar exchange rate News – The Pound has swung between gains and losses in the past week
- The GBP CAD exchange rate showed signs of a revival over the past seven days
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Sterling looks highly vulnerable based on interest rates
- Australian Dollar Currency Exchange Rate News – Sterling risen to the highest level against the Australian Dollar since the start of the year
- The Pound broke down to a new multi-year low of 1.4686 against the Australian Dollar