Pound Australian Dollar Exchange Rate Struggles as Investors Pull Away from Sterling
Despite continued optimism around Britain’s economic outlook, the Pound Australian Dollar (GBP/AUD) exchange rate has tumbled this week and remains low. The Australian Dollar (AUD) has been able to benefit from Sterling (GBP) losses.
Last week was yet another bullish week for GBP/AUD, as market coronavirus fears caused the ‘Aussie’ to tumble. GBP/AUD climbed from 1.80 to 1.81 throughout the week, and the interbank rate even touched a 2021 high of 1.82.
This week’s movement has been comparatively bearish though. GBP/AUD tumbled as investors sold the Pound, and the pair is still falling today. GBP/AUD trends in the interbank region of 1.80 at the time of writing, and below last week’s opening levels.
For now, investors are looking ahead to more Australian services data, as well as expected UK growth rate and economic reopening news next week.
Pound (GBP) Exchange Rates Struggle despite Forecast-Beating Construction Data
The Pound has been sold this week. Investors are selling the British currency back from its best levels in profit-taking after weeks of strong performance.
This is partially because markets are starting to see the British currency as overvalued. Other nations ramping up coronavirus vaccinations are also dampening the Pound’s comparative appeal.
Recent UK data has done little to influence Sterling appeal either. UK services PMI data fell slightly short of expectations yesterday, and today’s UK construction PMI was largely brushed over.
Tim Moore, Economics Director at IHS Markit, said there was a ‘surge’ in construction output last month:
‘The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects.’
Australian Dollar (AUD) Benefits from Rival Weakness despite Lack of Fresh Support
The Australian Dollar has seen steadier demand this week. Last week saw the currency sold on fresh ‘third wave’ coronavirus fears, but recovery hopes are once again supporting ‘Aussie’ instead in recent sessions.
Markets remain overall bullish, amid hopes that major economies including the UK and US are recovering from the coronavirus pandemic.
Concerns about Australian trade also had no notable impact on Australian Dollar movement this week. Australia’s government has signalled it could consider financial assistance to mining groups owned by GFG.
According to Simon Birmingham, Australia’s Finance Minister:
‘Governments are monitoring this situation very closely and indeed doing the type of contingency thinking and planning that that would be prudent in these sorts of circumstances.’
Pound Australian Dollar (GBP/AUD) Exchange Rate Could See Late-Week Shift on Australian Data
Most of this week’s notable data has been published already, but a couple of fairly influential Australian ecostats are due for publication in Friday’s Asian session.
Australian services PMI data from Ai Group could be more influential than the Markit print if it surprises investors. Australian building permits data from February is also due to be published.
Strong Australian data could make it easier for AUD to sustain some of its strong performance this week and keep pressure on GBP/AUD.
On the other hand, weak Australian data could make it easier for GBP/AUD to recover this week’s losses.
However, amid a lack of surprising Australian data, investors will be looking ahead to next week when the UK will continue its economic reopening and British growth data will be published.
Of course, continued shifts in global risk sentiment will continue to influence the Pound Australian Dollar (GBP/AUD) exchange rate as well.