Foreign Currency Market Update – GBP / AUD Update
Over the past week, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 2.0940 to 2.0968.
The Australian Dollar was broadly bearish for much of last week due to geopolitical tensions in Greece, a potential Chinese stock market crash and bearish commodity prices. Generally damp market sentiment has had a marked effect on the ‘Aussie’ (AUD) and the past week saw risk-appetite fizzle away after the International Monetary Fund (IMF) cut global growth forecasts in response to North America’s weak first-quarter. The ‘Aussie’ did spike midweek, however, after the IMF warned the Federal Reserve against hiking the cash rate too early lest they disrupt global economic growth but returned to multi-year lows against peers like the Pound and US Dollar before the weekend.
The Pound Sterling to Australia Dollar (GBP/AUD) exchange rate gradually appreciated over the past week as damp market sentiment micrified concerns regarding British exports to the Eurozone. The Pound performed poorly against most of its currency rivals, however, amid speculation that the Bank of England (BoE) will hold the current record-low 0.5% benchmark interest rate into the first-quarter of 2016.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced by around 0.61% during Monday’s European session. The appreciation is partly the result of comments from Byron Wien, vice chairman of the advisory services unit at Blackstone Group LP. Wien stated that he expects the Federal Reserve to liftoff with rate adjustments in 2015 and maybe as soon as September. In general, a stronger US Dollar is bad news for the high-yielding, risk-correlated Oceanic currency. The prospect of a Federal Reserve rate hike in September has also caused gold prices to crash, which has a marked effect on the ‘Aussie’. Even slightly improved risk-sentiment, as a result of Greece and Eurozone officials managing to scrape together an 11th-hour deal, wasn’t enough to provoke an ‘Aussie’ uptrend. Although it is fair to say that the new deal is currently being treated cautiously by investors given that it still has to be agreed by Syriza and Germany. The new accord has been enough to allay fears regarding British exports to the Eurozone, however, which has caused the Pound to rally versus many of its peers.
Looking ahead, geopolitical developments ought to dominate ‘Aussie’ trade over the coming days. In addition, news regarding Federal Reserve rate hikes and commodity price shifts will impact the Australian Dollar. Domestic data is unlikely to be significantly impactful with so many exterior forces causing movement. With that being said, NAB Business Confidence, Westpac Consumer Confidence, Consumer Inflation Expectation and the Conference Board Leading Index all have the potential to spark ‘Aussie’ changes. In terms of the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate movement, Tuesday’s British Consumer Price Index is very likely to cause volatility.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 2.0777 to 2.0974 during Monday’s European session.
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