Australian Dollar Exchange Rates See Negative Bias Vs GBP, USD After West Australia Gets A Wake Up Call

Published: 20 Oct 2017 21:24 Currency Markets Ecomomy News Forex

Australian dollar to pound sterling exchange rate forecast

Despite more positive domestic data the Aussie Dollar exchange rates have struggled to regain its footing against rivals, particularly amidst increased risk aversion. Where next for the AUD?

The Australian dollar exchange rate complex has been generally soft against its competitors today, due to concerns about the faring of West Australia.

According to recent reports, West Australia is in store for contraction for the third year in a row, as well as greater unemployment and less wage growth.

It is possible that this is on account of the sliding state of national and regional mining, as well as more endemic problems to the region.

Demand for the Australian Dollar exchange rates (AUD) declined ahead of the weekend in response to words from members of the Federal Open Market Committee (FOMC).

As notorious hawk Kansas City Fed President Esther George indicated a belief that interest rates are currently too low markets were inclined to adopt a more risk averse position.

Before we continue with the news, here are the latest AUD fx rates for your reference:

On Friday 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.

Today finds the pound to us dollar spot exchange rate priced at 1.262.

The pound conversion rate (against new zealand dollar) is quoted at 2.112 NZD/GBP.

NB: the forex rates mentioned above, revised as of 29th Mar 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

Earlier: The Aussie dollar could decline against its rivals tomorrow, owing to a simple lack of Aussie-related data.

The AUD/GBP exchange rate may decline notably before the weekend, due to the fact that no actual Australian data is due before the coming Tuesday.

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Of particular note tomorrow will be the US advance retail sales and University of Michigan confidence result, both of which have positive forecasts assigned.

Bearishness continued to drive the Australian Dollar exchange rates (AUD) after May’s Consumer Inflation Expectation indicated further softening of domestic sentiment.

While the Bank of England (BoE) maintained a more dovish tone with regards to the current economic outlook and possible impacts of a ‘Brexit’ this did not prevent the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate from rallying strongly.

Confidence in the Australian Dollar (AUD) remained on a general downtrend in the wake of the Reserve Bank of Australia’s (RBA) surprise decision to cut interest rates at its May policy meeting.

Markets have shown concern that the central bank may be inclined towards further easing in the near future, although the Australian Dollar to US Dollar (AUD/USD) exchange rate recovered some ground on the back of a disappointing US Non-Farm Payrolls report.

With the odds of a June interest rate hike from the Federal Open Market Committee (FOMC) approaching zero the Australian Dollar experienced a limited boost, although investors largely retained a risk-off mentality.

Despite a strong increase in the Westpac Consumer Confidence Index the appeal of the Australian Dollar diminished afresh on Wednesday, with concerns still heightened over the outlook of the domestic economy.

A stronger rallying point could come in the form of May’s Consumer Inflation Expectation report, providing expectations point towards a broader improvement in local inflationary pressure.

While an increase in inflation would offer reassurance to the RBA, and possibly forestall further monetary loosening, wider market sentiment could continue to weigh down the commodity-correlated currency.

Should the measure point towards a decline in domestic inflation, however, the Australian Dollar is expected to slump across the board and could maintain a downside bias heading into the weekend.

pound sterling to australian dollar exchange rate chart

Weak UK Production Figures Fail to Boost AUD/GBP Exchange Rate

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate struggled to capitalise on the recent bout of ‘Aussie’ softness, however, as the latest UK production data disappointed.

Although Industrial Production did not sink as far on the year as investors had anticipated the sector nevertheless entered a state of recession in April, suggesting that the domestic economy remains under heavy slowdown pressure.

This weaker showing did not bode well ahead of the Bank of England’s (BoE) May policy meeting, increasing the chances of policymakers adopting a more dovish view on monetary policy.

HSBC Forecast: Fed to Hike Rates in September?

Generally the US Dollar (USD) has been on a weak run this week, still reeling from the impact of an unexpectedly poor payrolls report and damage to the chances of the Fed choosing to raise interest rates sooner rather than later.

Researchers at HSBC note that the chances of an imminent rate hike are limited, commenting:

‘If the economic data are strong in coming weeks and inflation picks up, the FOMC could send a signal at its June meeting that a rate hike as soon as July was on the table. However, there is no press conference scheduled at the July FOMC meeting, and we believe the Committee currently has a preference for acting only at meetings with a press conference. In our view, that makes September more likely for a rate hike than July even if the data start to improve.’

With this in mind an improved Advance Retail Sales or University of Michigan Confidence Index figure could drive the US Dollar to Australian Dollar (USD/AUD) exchange rate higher, consolidating on the diminished appeal of the antipodean currency.

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