Foreign Currency Market Update – GBP / AUD Update
The past week saw the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate decline steadily from a high of 2.1478 at the beginning of the week to around 2.0981 by the close of the European session on Friday.
The Pound was mainly damaged in its performance by its own domestic data, which served to repeatedly scupper the UK currency’s chances against its peers. The week began poorly, with the uptick for annual November Rightmove House Prices sparking further fears that an unaffordable UK housing bubble was expanding across the country.
Tuesday’s Inflation Rate data for October had a less detrimental effect on Pound Sterling, due to the relatively balanced nature of the outcome. A speech from Bank of England (BoE) Deputy Governor Ben Broadbent on Wednesday was somewhat encouraging for investors in the Pound as Broadbent advised investors that instead of focusing on the UK’s inflation rate results for their interest rate hike predictions, they should instead consider wider areas of the UK economy when making their calculations. In addition, Broadbent also hawkishly refused to rule out the possibility that a UK interest rate hike could occur in 2016.
Thursday and Friday were decidedly negative for the Pound’s prospects, however, which meant that Sterling moved into the weekend on an extremely low note. Thursday bought only disappointing Retail Sales results for October, while Friday’s worse-than-expected decline in the UK’s borrowing deficit meant that this week’s Autumn Statement is unlikely to mean anything good for UK spending sectors outside of defence.
This week, Pound Sterling/Australian Dollar exchange rate movement may occur as a result of the UK BBA Loans for House Purchases in October, the UK GDP Figures for the third quarter, the UK Gfk Consumer Confidence Survey and a speech from Reserve Bank of Australia (RBA) Governor Glenn Stevens.
Covering the UK side of results first, the BBA Loans figure is due out on Wednesday and has been forecast to rise from 44489 to 45500; this may unsettle investors due to current concerns over a growing UK housing bubble. Friday will bring the remainder of the high-profile UK releases, in the form of the currently stagnation-forecast Q3 GDP and the Consumer Confidence Survey for November, which is similarly predicted to remain unchanged at 2 points.
For Australia, the week is likely to be fairly quiet in terms of domestic data releases. The most notable occurrence will be Stevens’ speech on Tuesday, which is scheduled to be delivered at the Australian Business Economists’ Annual Dinner.
Heads Up
Summary of major upcoming data releases that we think may move the market.