GBP to AUD Exchange Rate Seesaws ahead of BoE Rate Verdict
The Pound is continuing Tuesday’s bearish run as the increasing likelihood of Scottish independence weighs heavily on Sterling. The ‘Aussie’ (AUD), meanwhile, has reversed Tuesday’s low trend after Gross Domestic Product data exceeded expectations.
If you're looking to make an international money transfer, we recommend TorFX.
Tuesday was a difficult day for those invested in the Pound Sterling as impressive construction data failed to have a positive impact on the British currency’s movement.
The UK Construction PMI was forecast to drop from the previous score of 62.4 to 61.5, but the actual data was an unforeseen jump to 64.0.
Ordinarily this would have had a positive impact on Sterling movement but the PMI failed to overshadow a surprising YouGov poll on Scottish independence.
A YouGov poll released on Monday night showed that the lead for the unionists had reduced to only 6%, down from 22% seen less than a month ago and 14% in mid August. Writing in the Sun on Tuesday, the YouGov president, Peter Kellner, described the independence campaign as being ‘in touching distance of victory’.
Blair Jenkins, the head of Yes Scotland, said: ‘This breakthrough poll shows that yes has the big momentum. We only need another three-point swing to achieve a yes for Scotland on 18 September […] While the no campaign press the panic button and blame each other for a series of blunders, yes will get on with the job of persuading more of our fellow citizens – both no and undecided voters – that we need a yes vote to put Scotland’s future in Scotland’s hands.’
The effect of this poll was to see the Pound plunge against nearly all of its major peers with the exception of the New Zealand Dollar.
Tuesday was less-than-ideal for the Australian Dollar after the Reserve Bank of Australia chose to maintain their current interest rate; arguing that an overvaluation of the ‘Aussie’ has hampered their economic growth.
The Pound Sterling to Australian Dollar exchange rate has hit a low today 1.7644.
Wednesday has seen a reversal in fortune for the Australian Dollar but a continuation of the problems for Sterling.
The UK Services PMI was forecast to drop from the previous figure of 59.1 to 58.5, but the actual data showed an increase to 60.5.
Chris Williamson, Chief Economist at Markit, said; ‘An acceleration of growth in the vast services sector and an on-going construction boom offset a weakened performance in manufacturing in August. The three PMI surveys indicate that the economy grew at the fastest rate since last November, providing further ammunition for policymakers arguing for higher interest rates […] the sustained elevated PMI readings suggest we will see another quarter of strong economic growth in the third quarter, similar to the 0.8% expansions seen the first two quarters of the year’.
Ordinarily this impressive services data would have bolstered the Pound across the board, especially considering that the services sector makes up the vast majority of the British economy. However, it seems that trader anxiety over the Scottish bid for independence has completely overshadowed the positive UK data.
Meanwhile it seems that the trader reaction to the comments made by the Reserve Bank of Australia Governor Glenn Stevens has softened considerably.
The ‘Aussie’ has been buoyed by impressive Gross Domestic Product growth. Australian GDP was forecast to have grown by 3.0%, but the actual data revealed increased growth of 3.1%. The ‘Aussie’ was also bolstered by the Performance of Service Index which rose from the previous figure of 49.3 to 49.4.
The positive surge for the ‘Aussie’ has had a significant contribution from Chinese data as well.
Chinese Non-Manufacturing has risen from 54.2 to 54.4, the Composite PMI has increased from 51.6 to 52.8 and the Services PMI jumped from 50 to 54.1.
Pound Sterling to Australian Dollar Exchange Rate Forecast
Thursday will be of significance to those invested in the Pound as the Bank of England will be making a decision on interest rates. It is widely agreed, however, that the likelihood that they will decide to hike the rate is very minimal. However, it will be of interest to see whether there have been any dissenters, as seen in the most recent BoE policy meeting.
In terms of Australian economic data Thursday’s Retail Sales and Trade Balance data will have influence over ‘Aussie’ movement.
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.7614.
As traders await the upcoming Bank of England interest rate decision the Pound to ‘Aussie’ (AUD) exchange rate has fluctuated within a reasonably narrow field.
Australian economic data has printed reasonably positively on Thursday morning. Seasonally Adjusted Retail Sales stayed faithful to the forecast figure of 0.4%, and Trade Balance showed a positive increase to -1359 million despite having been forecast at -1750 million.
Expect a certain amount of volatility in the Pound to ‘Aussie’ exchange rate over the course of the day, especially after the key Bank of England interest rate decision. Although it is unlikely that there will be any changes in monetary policy or the interest rate, it will be interesting to see if the policymakers are united or if there are dissenters as seen in the previous policy meeting.