Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate hits Weekly Low on Soft UK Data
With trader sentiment taking a negative spin towards Sterling following a dovish remark from a Bank of England policymaker; the Pound has softened against the majority of its most traded currency competitors. Friday’s UK data has printed below expectations which will only aid the Sterling downtrend. The Australian Dollar has also had a negative data result on Friday but this hasn’t been enough to soften the ‘Aussie’ (AUD) exchange rate.
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The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8326.
On Thursday the Bank of England’s newest policymaker Kristin Forbes said in her maiden speech that the strength of Sterling last year helped keep annual inflation below 2%, but that effect may soon change. ‘Sterling’s past moves have reduced the risk of inflation increasing sharply, despite the strong growth in employment and the overall economy,’ Ms. Forbes said in a speech in London. ‘The dampening effect of Sterling’s past appreciation, however, will peak at the end of 2014 and then begin to fade,’ she said.
Sterling depreciated against the majority of its most traded currency rivals as a result of this speech in spite of better-than-forecast UK construction data.
As investors pared back the US Dollar on fears that over-purchase had caused the ‘Buck’ (USD) to rally beyond the level that recent data had warranted; emerging-market currencies and risk-sensitive currencies appreciated. The Australian Dollar, as a risk-sensitive currency, benefited from a softened US Dollar. The ‘Aussie’ also benefitted from trade balance data which improved upon the median market forecast.
The Pound Sterling to Australian Dollar exchange rate has hit a low today of 1.8300.
Friday’s British data has only aided the Sterling downfall. The nation’s Services PMI was expected to decline a little from 60.5 to 59, but the actual result showed a greater fall to 58.7. Chris Williamson, Chief Economist at Markit, said; ‘September’s PMI surveys suggest that the UK most likely enjoyed another spell of above-trend economic growth in the third quarter, but the recovery appears to be losing its legs. The PMI surveys are collectively signalling GDP growth of 0.8% in the third quarter, down from 0.9% in the three months to June but still strong by historical standards. However, the pace of expansion hit a six-month low in September and is showing signs of moderating further as we move towards the end of the year’.
The UK Composite PMI also declined beyond the market consensus having dropped from 59.3 to 57.4.
Australian data on Friday has been mixed but has not had a major effect on the ‘Aussie’ exchange rate. The AiG Performance of Service Index declined from 49.4 to 45.4, but New Home Sales increased by 3.3% following a drop of 5.7% the previous month.
Forecast for the Pound to Australian Dollar Exchange Rate
With all of the Australian and British data already published on Friday it is very unlikely that there will be any great changes in the GBP/AUD exchange rate. The pairing is forecast to continue to trend lower over the weekend unless an impromptu speech from a BoE policymaker rectifies the dovish statement from Forbes.