Pound to Aus Dollar (GBP/AUD) Exchange Rate as UK Data Disappoints Investors

April 28, 2015 - Written by Frank Davies

STORY LINK Pound to Aus Dollar (GBP/AUD) Exchange Rate as UK Data Disappoints Investors

GBP/AUD Weakens in Response to Subpar UK Data

The Pound fell against the Australian Dollar on Monday after weaker-than-expected UK data surfaced. CBI Business Optimism registered a fall from 15 to 3 in April rather than climbing to 19 as economists had suggested. Additionally, the Trends Selling Prices stat fell into contraction at -3 in April rather than dropping from 4 to 2. However, Trends Total Orders registered growth from 0 to 1 but failed to reach the 4 economists had expected. The run-up to the general election is thought to be shaking sentiment in the UK and impacting business gauges.

Industry expert Katja Hall stated: ‘Among the measures business wants in the first 100 days of a new government, an ambitious, long-term export strategy must be a central element to keep growth on course.’

Additionally, the Pound has been softer ahead of the highly influential Gross Domestic Product stats out on Tuesday. The UK is expected to see a slip from 3.0% to 2.6% on the year in quarter one. However, if the British economy has been able to record higher levels of growth, the Pound exchange rate could be offered some significant support.

Australian Dollar Supported by Fluctuating Commodity Prices

Meanwhile, the Australian Dollar has been supported by rising commodity prices ahead of the Reserve Bank of Australia’s upcoming monetary policy meeting. Coal and iron ore values have increased and allowed the ‘Aussie’ exchange rate to clamber higher. Australia’s largest export is iron ore and therefore any depreciation in prices can cause major ‘Aussie’ weakness. Iron ore has tumbled by around 50% in recent months and some experts believe the price is unlikely to recover dramatically in the near future as an oversupply continues to weigh on the market.

Another pressing matter for the Australian Dollar is the upcoming RBA meeting in May. Speculation has been rife and financial markets are now pricing in the 50% probability of rate cuts. The central bank recently adjusted the benchmark rate down by 25 basis points and stated that it would be prepared to cut further if needed. Another rate decrease could cause significant ‘Aussie’ weakening.

Currency strategist Sean Callow commented: ‘Given our ongoing expectation of a May RBA rate cut, we still see the Australian Dollar as a sell on rallies into early May.’

Furthermore, as growth concerns continue to circulate, it appears as if the probability of a rate cut could increase.

Economist Stephen Walters commented: ‘We think the fall in commodity prices, particularly iron ore, poses downside risks to the RBA’s medium-term growth projections, which are likely to be trimmed again in the May SoMP. This would be consistent with the RBA easing policy again.’

Speculation surrounding the UK general election could also add to Pound market movement in coming weeks.

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