Exchange Rates UK look at short-term prospects for the Pound to Australian Dollar (GBP/AUD) exchange rate in 2015-2016.
The Pound Sterling traded ahead of the Easter break towards the top end of its 3 month trading range against the Australian Dollar despite worse than expected UK construction data out last Thursday.
Markit reported that activity in the UK construction sector declined in March from its 4 month high in February with all three main areas of the UK construction industry losing momentum in March.
UK civil engineering registered the worst performance of the three sub-sectors while housing was the best-performer.
A quick foreign exchange market summary before we bring you the rest of the report:
On Sunday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.857
The live inter-bank GBP-EUR spot rate is quoted as 1.167 today.
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
The GBP to NZD exchange rate converts at 2.102 today.
Please note: the FX rates above, updated 28th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
UK Election Driving Pound Sterling Forecasts
The data strongly points towards the idea that UK companies have delayed spending decisions ahead of the 7 May general election date leading to employment figures rising at their slowest pace since December 2013.
Of interest, the data also highlights a sharp decline in the availability of sub-contractors who have hiked their charges by the largest amount since the survey began in April 1997.
Costs are also affected by shortages of material supplies. Despite all this, confidence in the industry seems to be on the increase with construction firms saying that they were more confident about the next 12 months than at any point since February 2006.
Howard Archer, chief UK and European economist at IHS Global Insight said
"There are grounds for optimism on the construction sector over the coming months, and it is notable that the purchasing managers showed confidence in the sector spiking to a nine-year high in March. Economic growth is expected to be healthy overall which should be supportive to commercial construction activity and civil engineering."
NFP Falls Short, US Dollar Sinks vs Pound, Euro and Australian Dollar
Although the UK markets were closed for Good Friday, there was an important data release out of the US with their latest non-farm payroll data, quite possibly the single most important economic data release of each month.
The latest data showed that the US economy created 126,000 jobs in March, far short of the anticipated 264,000 jobs expected raising speculation that the US Federal Reserve may delay raising US interest rates beyond June 2015.
Australian Dollar Exchange Rates Rocket as RBA Hold Cash Rate
Overnight, the Reserve Bank of Australia (RBA) decided to keep the Official cash rate (OCR) unchanged at their already record low of 2.25% sending the Australian Dollar soaring in the overnight foreign exchange market by over 1% across the board. Analysts suggested that the RBA are concerned about an overheated property market, particularly in and around Sydney but the decision was immediately criticised as recent data shows the rest of the Australian economy is growing at below trend rates and iron ore prices fell below $50 a metric ton for the first time in 10 years. Iron ore accounts for fully 20% of Australian exports.
The odds have now shortened considerably on a possible rate cut in May when the RBA next meet. As this will almost coincide with the date of the UK General Election on 7 May, expect further volatility in the foreign exchange market.