Pound to Australian Dollar (GBP/AUD) Exchange Rate Sees Losses as Mortgage Figures Published
UPDATE Tuesday 11:47 BST: The Pound (GBP) has lost some of Monday’s gains against the Australian Dollar (AUD) today, trading at AU$1.78 on the interbank exchange rate.
This deterioration for the pairing comes despite news that mortgage approvals have risen by more than expected during May.
The increase of 39,244 mortgages approved in May was a four-month high, but going further back this is down by -4% compared to May 2017.
Although this news represents a step towards pre-Brexit levels of housing market stability, there is still a long way to go before a full recovery is seen.
Cautious Optimism ahead of UK Mortgage Data Boosts GBP/AUD Exchange Rate
UPDATE 14:22 BST: Pound Sterling (GBP) has continued to advance against the Australian Dollar (AUD) today, rising up to AU$1.78 on the interbank rate.
This advance comes despite any major economic data to influence the pairing; traders may be considering a positive mortgage reading on Tuesday morning.
The mortgage approvals figure for May is predicted to show an expansion on April’s levels, which could be enough to push the Pound higher in value.
More mortgage approvals would suggest that the national housing market is in good condition, which could reassure GBP traders.
Small GBP/AUD Exchange Rate Rise despite Brexit Banking Warning
The Pound to Australian Dollar (GBP/AUD) exchange rate has seen a minor rise today, mainly down to AUD weakness making Pound Sterling look more appealing.
On the UK side, today’s economic news has focused on the potential damage that Brexit could cause to UK banks.
A report from the European Banking Authority (EBA) has concluded that UK banks are currently not prepared for the impact of a potential UK exit from the EU with no deal.
EBA Chair Andrea Enria has elaborated on the EBA’s findings, saying:
‘Firms cannot take for granted that they continue to operate as at present nor can they rely on as yet unrealised political agreements or public policy interventions.
‘Risks, capacity and legal implications must be examined and addressed.’
Some international banks have already started to move their operations out of the UK as contingency measures and this report could accelerate migration among remaining banks.
Although this hasn’t been enough to drag the GBP/AUD exchange rate down, the Pound’s gains against the Australian Dollar have still been limited by the news.
Australian Dollar to Pound (AUD/GBP) Exchange Rate Drops as Oil Price Warning Hits
On the other side of the pairing, the Australian Dollar (AUD) has fallen against the Pound (GBP) today due to concerning forecasts.
Economists are predicting that with global oil prices rising, the subsequent increase in fuel prices could cause difficulties for Australian households.
CBA Senior Economist Kristina Clifton has highlighted the problem, stating:
‘Around 62% of people use a car to travel to work. If petrol prices remain … elevated [then] we may see some impacts on housing spending patterns.”
GBP/AUD Exchange Rate Forecast: Could BoE Stability Report Affect Pound Sterling?
This week, Pound Sterling/Australian Dollar exchange rate movement may be caused by the release of a Bank of England (BoE) report, along with UK confidence and GDP data.
The report in question is the BoE’s latest financial stability assessment, which will come out on Wednesday morning.
The stability report has a dual purpose, as it looks at the current state of the UK economy and how it could be affected by future events.
Seven months have passed since the last stability report, so it is possible that the BoE will have revised its outlook on how much Brexit will affect the UK economy.
If the stability report is filled with cautious forecasts, the GBP/AUD exchange rate could decline; conversely, a finding of UK economic resilience would likely boost the Pound.
The week’s other UK economic data might not be so supportive if it shows negative consumer confidence stats and confirms that GDP growth slowed in Q1 2018.
The GfK consumer confidence reading is tipped to remain at -7 points, while a slowdown in Q1 2018 compared to Q4 2017 has been pencilled in.
There could be further GBP damage on the final Q1 business investment stats, if they show a moderate decline as forecast.
There is little Australian economic data to watch out for this week, which could leave the Pound dominant in the GBP/AUD pairing.