GBP/AUD Exchange Rate Falls as London House Prices Plummet

Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as UK House Prices Slide

UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate continued to slide and the pairing is currently trading at an inter-bank rate of AU$1.8162.

Data revealed that house prices in London plummeted by 3.8% compared to last year, making this the largest annual drop since mid-2009.

The fall in house prices in the country’s capital was the largest since the immediate aftermath of the financial crisis.

Commenting on this, Ben Brettell, Senior Economist at Hargreaves Lansdown said:

‘This follows efforts by policymakers to cut down on riskier mortgage lending, though clearly uncertainty over Brexit will have played a large part in the capital’s faltering housing market.’

Meanwhile, the modest UK inflation rate is helping the Bank of England (BoE) hold off on a fresh interest rate hike while the country waits for Brexit uncertainty to pass.

Pound Australian Dollar (GBP/AUD) Exchange Rate Falls as UK House Prices Drop

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate fell on Wednesday and the pairing is currently trading at an inter-bank rate of AU$1.8113.

This morning, the Office for National Statistics (ONS) revealed that the UK Consumer Price Index remained steady at 1.9% in March.

According to the data, prices of motor fuels and clothing pushed the cost of living higher, although this was offset by falling prices for food and recreational goods such as computer games.

Data also showed that house prices in the South East of England have fallen for the first time in six years.

Mike Hardie, Head of Inflation at the ONS said:

‘Annual house price growth has slowed to the lowest rate in close to seven years.

‘Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the South East for the first time since 2011.’

Australian Dollar (AUD) Rises as Expanding Chinese Economy Boosts Risk-Appetite

Today, the Australian Dollar rose to a two-month high following the release of data that revealed the Chinese economy grew by a higher-than-forecast 6.4% in Q1 2019.

Data also showed that annual growth in industrial output rose by 8.5% compared to a year earlier – the highest level in nearly five years.

Added to this, retail sales grew by a higher-than-forecast 8.7%.

This suggests that the attempts from the government to stimulate activity levels is working as the economy seems to be rebounding after a slowdown earlier in the year.

This buoyed the ‘Aussie’ as China’s economic growth indicated to some investors that the credit taps remain open, boosting risk-appetite.

However, China’s National Bureau of Statistics urged caution, as Spokesman Mao Shenyong told reporters:

‘The national economy enjoyed stable performance with growing positive factors and stronger market expectation and confidence.

‘Given slowing global economic growth and international trade, increasing international uncertainties and prominent domestic structural issues, the task of reform and development is arduous and downward pressure on the economy persists.’

Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Rise on Weak Australian Employment Data?

Looking ahead to Thursday, the Australian Dollar (AUD) could slip against the Pound (GBP) following the release of the latest Australian unemployment figures.

If unemployment rises above 5% in March, it could dampen sentiment in the ‘Aussie’.

Later in the day UK retail sales figures could cause Sterling to receive an upswing of support.

If sales increase by an annual 4.6% in March or higher than forecast, the Pound Australian Dollar (GBP/AUD) exchange rate could rise.

Millie Empson

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