Analysts Forecast that GBP AUD Exchange Rate has Topped Out

October 23, 2015 - Written by Ben Hughes

STORY LINK Analysts Forecast that GBP AUD Exchange Rate has Topped Out

FX NEWSFLASH: Australian Dollar (AUD) Exchange Rate Declined on Selling Pressure

Yesterday’s session in the global currency markets proved to be a tumultuous one for the Australian Dollar (currency : AUD).

The Aussie suffered sustained selling pressure during early trading and the source of the selling pressure came from an unusual source; ordinarily, announcements from a retail bank do not have the weight to shift the value of a currency on their own.

However, yesterday’s decision from Commonwealth Bank of Australia (ASX : CBA) to increase the rate of interest it charges on its home loans caused investors to shift against the Australian unit.

In the eyes of market participants, the news of a rate hike from Commonwealth placed additional pressure on the Reserve Bank of Australia to consider another interest rate cut, so the development sent the Pound Sterling Australian Dollar exchange rate up to 2.1488 GBP AUD – its highest level since 5th October.

The selling pressure on the Aussie was added to by comments from the People’s Bank of China policy adviser Bai Chongen who suggested that China will be unable to sustain levels of economic growth of 7.0% and that Asia’s number one economy is spending too much money on infrastructure projects.

Dovish ECB Supported Australian Dollar Appreciation on the Prospect of 'Easy Money', NZD CAD Gain

However, the European afternoon session saw the Aussie Dollar make a roaring comeback following comments from European Central Bank (ECB) President Mario Draghi who hinted that his Bank’s €65bn per calendar month Quantitative Easing programme could be extended past its current projected finishing date of September 2016.

The prospect of more ‘easy money’ sloshing around the global financial system provided the Commodity Dollars (AUD, NZD, CAD), as a bloc, with strong support and served to send world share markets higher.

Pound Sterling to Australian Dollar Exchange Rate Dropped to a Low of 2.1287

The upshot saw the Pound Australian Dollar exchange rate retrace down to an intraday low of 2.1287 GBP AUD. Analysts now forecast that GBP AUD’s mini-rally which began following the pair’s break to a fresh 3-month low of 2.0791 on 12th October, may now be running out of momentum.

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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts