Increased risk aversion had weighed on the Australian Dollar (AUD), thanks to shifting bets of a 2016 Fed rate hike, with the British pound (GBP) benefiting from unexpectedly positive post-Brexit data.
- The Pound to Australian Dollar exchange rate today: 1.71418.
- The Euro to Aus Dollar exchange rate today: 1.48475.
- The New Zealand Dollar to Australian Dollar rate: 0.95346 NZD/AUD.
Risk appetite declined sharply on Friday, with a round of profit taking helping to push the Australian dollar exchange rates lower in spite of markets remaining unconvinced by the prospect of an imminent Fed rate hike.
Although the market reaction to July’s UK Public Sector Net Borrowing report was less bullish this did not prevent the GBP/AUD exchange rate from trending higher ahead of the weekend.
There has been speculation from some analysts that part of the strength of Britain’s July retail sales has been due to the low value of the Pound inspiring a surge of tourism and tourist purchases of typically expensive items such as watches and jewellery.
Worries over the future of the post-referendum UK economy were unexpectedly eased when the July Claimant Count was found to have fallen by 8,600, causing GBP/AUD to climb.
Forecasts had anticipated a sharp rise in the number of those claiming unemployment benefit in the wake of the Brexit vote, prompting the Pound (GBP) to rally when the opposite was found to have occurred.
As a result, with risk appetite dented by speculation over the timing of the next Federal Reserve interest rate hike, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate trended strongly higher.
Latest Pound/Australian Dollar Exchange Rates
On Tuesday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The live inter-bank GBP-GBP spot rate is quoted as 1 today.
At time of writing the pound to us dollar exchange rate is quoted at 1.239.
Today finds the pound to new zealand dollar spot exchange rate priced at 2.095.
Please note: the FX rates above, updated 23rd 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.
The bullish run in US Dollar (USD) exchange rates was soon brought to an end, however, when the Federal Open Market Committee’s (FOMC) July meeting minutes proved more dovish than expected and encouraged an increase in risk appetite.
Confidence in the Australian Dollar (AUD) was also boosted by July’s domestic labour market data, as the Unemployment Rate was found to have unexpectedly dipped from 5.8% to 5.7%.
Although the optimism of the data was somewhat undermined by the fact that much of the jobs growth was in part-time rather than full-time work this nevertheless saw the ‘Aussie’ making gains across the board on Thursday morning.
Given that the Reserve Bank of Australia’s (RBA) recent comments pointed towards a greater emphasis on employment data when considering monetary policy investors were inclined to reduce their bets on the prospect of another interest rate cut in the near future.
Stronger-than-Expected Retail Sales Boosted GBP/AUD Exchange Rate
Even so, the GBP/AUD exchange rate soon rallied in response to July’s UK Retail Sales figures, which strongly bettered expectations to clock in at growth of 5.4% on the year.
As the ONS noted:
‘Compared with June 2016, the quantity bought increased by 1.4%; all sectors showed growth with the main contribution again coming from non-food stores.’
This stronger showing would seem to suggest that the initial impact of the Brexit vote had not been felt by consumers, with spending remaining decidedly robust despite the prevalent atmosphere of uncertainty.
However, with good summer weather having no doubt contributed to this boost and the material importance of consumption data rated as relatively low this may struggle to keep the Pound on a stronger footing for long.
Pound Sterling (GBP) Volatility Forecast with UK Public Borrowing in Focus
Ahead of the weekend the UK’s Public Sector Net Borrowing result for July will be of particular note for markets, with the indication of government borrowing of greater importance when gauging the health of the domestic economy.
Should government debt be shown to have increased significantly in the aftermath of the referendum result the Pound could be weighed down, with a larger deficit a greater risk amidst the post-Brexit uncertainty.
That said, higher borrowing could point towards a greater level of investment within the domestic economy, something which may well help to mitigate any slowdown stemming from the Brexit vote.