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 2.0906 to 2.1343.
The British asset advanced significantly against the Australian Dollar over the past week despite improving trader risk sentiment amid easing concerns regarding a Greek exit from the Eurozone. The ‘Aussie’ (AUD) depreciation was mostly the result of particularly bearish commodity prices. Of significant detriment to Australian Dollar gains were notable falls in platinum, gold, iron ore and copper prices. The handful of commodities that impact the Australian economy have declined by over 4% since the beginning of June.
In addition to sluggish commodity prices weighing on demand for the Oceanic currency, US Dollar strength also aided the ‘Aussie’ declination. With futures traders bringing forward bets as to the timing of a Federal Reserve rate hike, the resultant US Dollar uptrend caused the South pacific asset to slump. US Dollar strength was also one of the causes of the gold price drop.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within a tight range on Monday morning.
As a new week began, the Australian Dollar edged lower versus many of its currency rivals. This was despite a fractional improvement in gold prices and a subdued US Dollar. The lack of upward momentum can be linked to traders still feeling the effects of ongoing bearishness in the commodities market. In addition, although the Federal Reserve is expected to hold the cash rate at this week’s Federal Open Market Committee (FOMC) interest rate decision, most traders believe that accompanying statements will be hawkish and point towards a September liftoff.
The British Pound, meanwhile, softened versus many of its peers on Monday morning amid concerns that mixed data results last week will weigh on the Bank of England’s (BoE) Monetary Policy Committee (MPC) interest rate outlook. Trader profit locking, after the Pound’s recent appreciation, can also be attributed to the Pound’s downtrend during Monday’s European session.
Looking ahead, the coming week’s Australian economic docket is relatively sparse. In terms of domestic data with the potential to influence significant ‘Aussie’ changes; only Building Approvals and Private Sector Credit data is worth noting. Most Australian Dollar volatility will be the result of market sentiment and commodity prices. In terms of British data, Tuesday’s Gross Domestic Product readings will have a significant impact on Sterling movement. Quarterly expansion of or exceeding 0.7% could see the GBP/AUD exchange rate achieve a fresh multi-year high.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 2.1267 to 2.1348 during Monday’s European session.
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