Pound vs Australian Dollar (GBP/AUD) Trends Down, Sterling Exchange Rate Recovery Falters

September 22, 2014 - Written by Tim Boyer

STORY LINK Pound vs Australian Dollar (GBP/AUD) Trends Down, Sterling Exchange Rate Recovery Falters

The Pound to Australian Dollar exchange rate (GBP/AUD) upward trends seen on Monday were a result of Sterling stabilising post Scottish referendum.

The Australian Dollar dropped to lows against the Pound (GBP), Euro (EUR) and US Dollar (USD) last week as its largest trading partner, China, lost economic momentum.

Moreover, Australia’s commodity prices have tumbled of late, with the price of iron ore (Australia’s biggest export) posting a particularly notable decline.

Here's the latest Aus Dollar conversion rates today:

- The pound to australian dollar exchange rate is +1.08 per cent higher at 1.84425, with a 7 day range of 1.7905-1.8295
- The australian dollar to euro exchange rate is -0.81 per cent lower at 0.69052.
- The australian dollar to pound exchange rate is -1.07 per cent lower at 0.54223.
- The australian dollar to dollar exchange rate is -0.76 per cent lower at 0.88704.

Australian Dollar Exchange Rate Falls Against the Pound and the Euro

The ‘Aussie’ has recorded losses versus other majors in recent weeks after remaining stubbornly high for some time. The Australian Dollar had been bolstered by China’s improving growth and high demand for iron ore for industrial use. However, last week saw further proof of a slow-down in Chinese expansion which resulted in a drop in iron ore demand and prices. Analyst David Nowakowiski commented: ‘Domestically, mining output is still strong, but investment in the sector is not, and iron ore prices are plummeting.’

Furthermore, the People’s Bank of China announced it’s plan to give an injection of funds into Chinese banks to encourage lending in the economy. Nowakowski continued: ‘Although some easing of China’s credit crunch will help Australian exports in the short run, we see lower Chinese growth in 2015 as a headwind that will weaken Australia’s growth and inflation next year, and weigh on growth-orientated assets such as equities and the Australian Dollar.’

However, the ‘Aussie’ has fallen—like all other majors in recent months—against the US Dollar (USD). The Australian Dollar has continued to soften this week to below the 90 US cents benchmark after remaining above it for some months. Monday has seen the ‘Aussie’ trade in the high 88 US cents range, with the likelihood of depreciating more in the coming weeks. Nowakowski believes the ‘Aussie’ could slump dramatically lower still, suggesting: ‘The Australian Dollar is likely to weaken to below 75 US cents—a fall of around 20%.’

British Pound Gaining Strength as Scotland Remains in UK

Following the Scottish referendum, Sterling has spent the last few days stabilising. The Pound was subject to much fluctuation against other majors during the lead-up to the vote; however, once it was decided that Scotland would remain within the UK, the Pound was able to increase its value against other peers.

Tuesday will see the release of the Australian Consumer Confidence Index, a gauge of consumer sentiment within the Australian economy. Meanwhile, the UK will see Loans for House Purchase, Public Finances, and Public Sector Net Borrowing figures released on Tuesday also, which may bolster support for Sterling slightly. Whilst the UK will experience a data-free day on Wednesday, the ‘Aussie’ may see movement from domestic figures, including the Confidence Board Leading Index, Skilled Vacancies figures and the Reserve Bank of Australia’s (RBA) Stability Review. The review could prove to be highly influential for the ‘Aussie’ if the central bank discusses their unease regarding growing property prices, which may result in the RBA attempting to jawbone the currency lower. Meanwhile, the Pound could be influenced by Bank of England Governor, Mark Carney, who is scheduled to speak in Wales on Thursday.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Daily Currency Updates Pound A Forecasts