Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Falls despite UK Mortgage Approvals Jumping to a Nine-Month High

Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as UK Mortgage Approvals Jump

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged down today and the pairing is currently trading at an inter-bank rate of AU$1.8345.

This morning, data revealed that UK mortgage approvals had jumped to a nine-month high.

UK Finance reported that 39,980 loans for house purchases were approved in March, up from 39,207 in the previous month.

Meanwhile, Japanese industrial production saw its steepest decline since May 2015 which likely fuelled concerns over the global economy, to which the Australian Dollar is sensitive.

However, Sterling continued to edge down against the risk-sensitive Australian Dollar.

Australian Dollar (AUD) Edges Up despite Disappointing Australian Inflation

Data released early in the session revealed that Australian government bonds gained slightly.

However, the Australian Producer Price Index (PPI) for the first quarter of 2019 revealed inflation rose by a worse-than-forecast 0.4% compared to Q4 2018.

This was the weakest rise in inflation since Q2 2018.

This likely added further fuel to reports that the Reserve Bank of Australia would cut interest rates in the near-term.

However, Brexit sentiment likely weighed heavy on Sterling as reports suggested little progress is being made during cross-party discussions.

Australian Dollar (AUD) Rises despite High Likelihood of Near-Term RBA Rate Cut

Earlier this week, data revealed that Australian inflation is weak and continues to move further from the Reserve Bank of Australia’s (RBA) target.

This increased speculation among investors that the likelihood of a near-term RBA rate cut was increasing.

Analysts at ANZ Bank stated:

‘Bearish sentiment continues to grip the AUD after a weak inflation print firmed the case for a May rate cut.

‘The Aussie dipped below the key psychological level of 70 US cents […] as risk appetite dissipated but rebounded to close above key support.’

Nevertheless, the Australian currency continued to rise against Sterling on Friday.

Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Edge Down as Risk Sentiment Rises?

Looking ahead to the start of next week, the Australian Dollar (AUD) could rise against the Pound (GBP) as face-to-face trade talks between the US and China continue.

If trade talks prove successful, and reports emerge that the US and China are closer to a trade agreement, the risk-sensitive ‘Aussie’ could receive an upswing of support.

On Monday, the UK GfK consumer confidence figure is due for release, which could cause sentiment in Sterling to fall.

If April’s consumer confidence edges lower, it could cause the Pound Australian Dollar (GBP/AUD) exchange rate to fall.

Millie Empson

Contact Millie Empson