Pound to ?Aussie? (GBP/AUD) Relatively Static after RBA Statements and UK Data

May 18, 2015 - Written by David Woodsmith

STORY LINK Pound to ?Aussie? (GBP/AUD) Relatively Static after RBA Statements and UK Data

GBP/AUD Trends in Narrow Range

The Pound remained in a tight range against its ‘Aussie’ counterpart after UK data and central bank statements at the start of the week. The Oceanic currency slipped in the Australasian session after the Reserve Bank of Australia suggested that the door for interest rate cuts remained open.

Central bank deputy governor Philip Lowe commented: ‘We still have scope to lower interest rates if we need to, that doesn’t mean we’re going to but we have scope to do that.’
Any dovish central bank statements can cause significant depreciation in the respective currency and the RBA statement was no exception.
Currency expert Andreas Tjahja commented: ‘The market took this as confirmation that the RBA can cut further which pushed the ‘Aussie’ down. On Friday night, there was weak US data that pushed the ‘Aussie’ up to around 80.50 but then the RBA comment came and it went down and has stayed down.’

Australian Data Disappoints, but Investors focus on RBA Minutes

Additionally, Australian New Motor Vehicle Sales fell by -1.5% in April, pulling the annual figure down from 4.6% to 2.8%. However, Chinese data helped to buoy optimism that the Chinese housing sector may be emerging from its recent downturn. April saw Chinese property prices remain at -6.1% on the year, rather than falling any further. Additionally, house prices in both Shanghai and Beijing rebounded slightly from the March decline.

Westpac stated: ‘Aggregate prices remain under (modest) downward pressure, but the signs of healing broadened further in April to a larger sample of non-tier 1 cities, while tier-1 prices are now unambiguously rising again. This provides further indication that the overall market has left the very worst behind it.’

Any developments in China can have a major impact on the Australian Dollar exchange rate as it shares such strong trade links with the Oceanic region. Meanwhile, in the UK, Rightmove recorded a tumble in house prices in May as a result of the general election. The political vote caused some drastic market concerns as investors weighed the possibility of a government shakeup. The gauge recorded 2.5% annual growth in May, a decline from the 4.7% expansion witnessed in April. The month alone registered a -0.1% contraction, a far cry from April’s 1.6% increase.

UK Inflation Data Crucial this Week

Investors in the Pound will be looking toward Tuesday as a day of influence with UK inflation data scheduled for release. The UK Consumer Price Index will emerge on Tuesday morning and is expected to cause some major market movement. Economists currently estimate inflation will remain at 0.0% in April.

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TAGS: Australian Dollar Forecasts