Pound to Australian Dollar Exchange Rate Forecast: GBP/AUD May Hold Gains if Australian Data Disappoints

Update 2: Pound to Australian Dollar Exchange Rate Losses Limited on Underwhelming Australian Business Confidence

While the Australian Dollar (AUD) was supported overnight by a fresh boost in hopes that a ‘trade war’ could be avoided, the Pound to Australian Dollar (GBP/AUD) exchange rate’s losses were limited.

At the time of writing, GBP/AUD trended near the interbank level of 1.83. The pair had recovered from an overnight dip to 1.82.

This was partially because of Australia’s March business confidence survey data from the NAB, which fell short of 12 forecasts and slowed from 9 to 7.

It limited demand for the Australian Dollar. Hawkish comments from Bank of England (BoE) officials also helped to support GBP/AUD.

Update 1: Pound to Australian Dollar Exchange Rate Advances on Chinese Yuan (CNY) Speculation

Reports suggesting that China is studying the possibility of Chinese Yuan (CNY) devaluation left the trade-correlated Australian Dollar (AUD) even less appealing on Monday.

As a result, the Pound to Australian Dollar (GBP/AUD) exchange rate continued to climb.

By Monday afternoon, GBP/AUD was less than half a cent away from the yearly highs seen in late March.

China was reportedly considering Chinese Yuan adjustment as part of its trade actions against the US, worsening concerns that a US-China ‘trade war’ could be possible.

Pound to Australian Dollar Exchange Rate Edges Higher Despite Attempts to Calm Trade War Fears

Persistent concerns that the US could spark a trade war with China continued to help the Pound to Australian Dollar (GBP/AUD) exchange rate edge higher when markets opened on Monday.

Despite GBP/AUD trending just about a cent below its best levels since 2016 the pair advanced last week, up from the interbank level of 1.82 to 1.83. On Monday, GBP/AUD continued to climb and touched on an interbank high of 1.84.

The pair climbed despite mixed UK data and solid Australian data, as investors remained anxious that the US President would not back away from his tough trade talk with China.

As China is Australia’s biggest trade partner, investors are anxious that Australia could be one of the developed nations more heavily impacted by a potential ‘trade war’ between the US and China.

Donald Trump briefly attempted to soothe market concerns about the possibility of a trade war, but later continued to direct his fiery rhetoric towards China. This has kept Australian Dollar (AUD) investors anxious.

Pound (GBP) Exchange Rates Sturdy on Bank of England (BoE) Hopes

Despite a lack of supportive recent UK data, the Pound (GBP) continued to be lifted by Bank of England (BoE) interest rate speculation on Monday.

In fact, despite not being particularly influential, strong UK housing data on Monday was enough to boost market bets that the BoE would hike UK interest rates again in May.

Monday’s UK house price index results from Halifax beat expectations in both monthly and yearly prints. The monthly figure beat 0.2% forecasts and came in at 1.5%, while the yearly figure rose from 1.8% to 2.7% rather than the expected 2.1%.

The data was seen boosting market bets that the Bank of England will be hiking UK interest rates during its May policy decision meeting.

This is because UK housing prices had been a key concern following the Brexit vote.

Australian Dollar (AUD) Exchange Rates Little Improved Despite Solid Australian Data

Australian data has been strong over the past week, but despite this the Australian Dollar has been unable to benefit due to persistent market concerns about the possibility of a US sparked trade war that could involve China and impact Australian trade in major ways.

Monday continued the trend of strong Australian ecostats, as Australia’s March construction index improved from 56.0 to a strong 57.2.

It followed last week’s data, including better-than-expected Australian retail sales results and a strong March services PMI for the nation.

Pound to Australian Dollar (GBP/AUD) Forecast: Australian Confidence Figures in Focus

Could the Australian Dollar see stronger performance if domestic data continues to impress? The Pound to Australian Dollar (GBP/AUD) exchange rate may at least be held away from its best levels in two years if Australian confidence stats are strong this week.

Tuesday will see the publication of the NAB’s March business confidence survey results, which are forecast to have improved from 9 to 12.

Wednesday will follow with Westpac’s April consumer confidence survey results, as well as a speech from Reserve Bank of Australia (RBA) Governor Philip Lowe.

However, if Donald Trump continues to take a tough line on US-China trade and there are no fresh signs of the two nations negotiating rather than continuing the current back and forth, the Australian Dollar’s strength will be limited.

As for Pound movement, Sterling could be influenced by UK trade balance or production data on Wednesday. Overall though, Sterling is more likely to be driven by potential Brexit developments and Bank of England (BoE) bets.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard