Pound to Aus Dollar (GBP/AUD) Exchange Rate Relatively Static in Quiet Data Conditions

October 27, 2014 - Written by Ben Hughes

STORY LINK Pound to Aus Dollar (GBP/AUD) Exchange Rate Relatively Static in Quiet Data Conditions

The British Pound to Australian Dollar (GBP/AUD) exchange rate trended in a narrow range as the week started in a quiet data-day.

The UK saw the release of CBI Reported Sales, which remained at 31 in October and bypassed economists’ forecasts to fall to 25.

Meanwhile, Australia is only releasing its Weekly ANZ Roy Morgan Consumer Confidence Index on Monday, which reached 111.6 in the previous report. However, the GBP to AUD currency pair may see movement following statements from central bank officials.

Lack of UK and Australian Data Leaves Currency Pair Subject to Global Developments

The ‘Aussie’ could be in for a relatively quiet trading week with a lack of highly influential Australian data due scheduled for publication.

Thursday will see September’s HIA New Home Sales figures released. The previous ecostat showed growth of 3.3% in August on the month.

Furthermore, both the Australian Import and Export Price Indexes will be out, which could encourage some ‘Aussie’ movement.

Australian Private Sector Credit and Producer Price Index stats (due out on Friday) are of relatively little importance and are unlikely to impact the Australian commodity currency in a major way.

However, the Australian Dollar exchange rate took a hit in the early part of the week from the Commonwealth Bank of Australia (CBA) dovishly revising its interest rate forecast.

The institution now believes that the Reserve Bank of Australia (RBA) won’t be increasing interest rates until late 2015.

The bank asserted that it now sees the first hike occurring in August instead of the initially predicted February—just one month before the US Federal Reserve is expected to hike rates.

The Reserve Bank of Australia has recently embraced macroprudential regulation in an attempt to cool the overheating Australian property market.

By controlling house prices the central bank will be able to maintain the current 2.5% benchmark rate for longer.

CBA Chief Economist Michael Blythe commented on the re-assessment, stating: ‘We suspect that this shift in thinking towards alternative tools was done reluctantly.

But it does indicate a greater reluctance to use interest rates than we had thought likely. So time is the issue. The RBA needs more of it to assess emerging trends. They are prepared to buy it through macroprudential initiatives.’

Pound has Potential to Rally against Currency Majors

Meanwhile, according to currency experts the Pound could be poised to rally. Brown Brothers Harriman & Co suggested that recent charts have indicate the UK currency could grow stronger against other majors such as the US Dollar (USD).

Sterling has depreciated by 6% against the ‘Buck’ since attaining a five-year high in July. Significant UK data is also thin on the ground this week with Money Supply, Mortgage Approvals, Net Consumer Credit and New Lending Secured on Dwellings on Wednesday and a Consumer Confidence Survey on Friday.

The Pound is likely to be sensitive to data as Bank of England interest rate hike speculation continues to be a hot topic in the UK.

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TAGS: Australian Dollar Forecasts Currency Predictions Daily Cur Forecasts