The British Pound to Australian Dollar exchange rate put in a varied performance last week, falling from peaks of 1.7965 GBP/AUD (recorded at the start of the week) to a lows of 1.7786.
As the week began, the Pound Sterling saw a rise vs the Euro (EUR), US Dollar (USD) and NZ Dollar (NZD) as GBP was supported by Bank of England Governor Mark Carney’s seeming change of heart regarding the correlation of UK average wage growth and the first national interest rate increase.
The Australian Dolar (AUD), meanwhile, was struggling slightly in the wake of comments issued by Reserve Bank of Australia Governor Glenn Stevens. Stevens argued that the Australian budget was not that tough, and that national fiscal reform would need to be addressed if Australia hoped to see economic progress in the future.
Looking into the foreign exchange FX markets today (last updated 27/08/2014 09:20 GMT):
- The pound to australian dollar exchange rate is 0.34 per cent lower at 1.77975.
- The australian dollar to euro exchange rate is 0.05 per cent higher at 0.70768.
- The australian dollar to pound exchange rate is 0.03 per cent higher at 0.56314.
- The australian dollar to us dollar exchange rate is 0.19 per cent higher at 0.93324.
Note: these are inter-bank money transfer rates to which margins are applied when sending money abroad - speak to a recommended foreign exchange broker to lock in the best exchange rates.
Stevens stated; ‘I did not think, really, that the budget was that draconian, frankly, in a macro-economic sense. I am not talking about this measure or that measure; I am talking about the pace of intended consolidation over a run of years. That is actually not that tough, frankly. […] We as a community have decided we want to do some very big and very costly and very good things in the public space but we haven’t actually taken the decisions to secure the funding for those things, so far as I can see. That’s not catastrophic today; it is going to be a medium-term issue if we don’t address it’ There’s ample evidence around the world of countries that don’t have this conversation until it’s very late and then it’s a very hard one to have. And that’s when you do get really draconian measures almost forced on you.’
GBP AUD dips after poor UK data
Further GBP/AUD movement occurred after the UK’s inflation data fell flat, and the Australian Dollar was able to hold a stronger position against its British counterpart up until the publication of slightly disappointing Chinese HSBC Manufacturing PMI. Meanwhile, the AUD/USD exchange rate trended between a 10-week low and a two-week high as US date impressed and investors braced themselves for some potentially provocative remarks from the annual gathering of global central bankers.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was holding steady ahead of the Jackson Hole gathering in Wyoming. Before Federal Reserve Chairwoman Janet Yellen took to the spotlight, one foreign currency market analyst noted; ‘The possibility of dovish remarks by Yellen during her speech on the labour market poses a threat to the recent strength of the reserve currency. A reiteration of strong concerns over persistent weakness in wage growth and under-employment would reinforce the prospect that rates will remain at record lows over the near-term.’ However, while Yellen wasn’t exactly hawkish in her address, she did highlight the fact that the US labour market has made positive strides in recent years and the US Dollar consequently climbed.
Pound to Australian Dollar forecast - watch for news from the US and China
Over the next five days the Pound to Australian Dollar (GBP/AUD) exchange rate could trend lower amid a lack of particularly influential economic reports for the UK. The majority of the data due to be published from Australia this week is similarly low key, although investors will be taking note of Australia’s Construction Work Done report for the second quarter, the Westpac MNI Consumer Sentiment gauge, HIA New Home Sales, Private Capital Expenditure for the second quarter and domestic Private Sector Credit numbers. We forecast that news from China and the US will also have an impact on the GBP/AUD exchange rate.