GBP AUD Forecast: Pound to Australian Dollar Exchange Rate Losses Predicted; US Dollar Recovers

May 14, 2014 - Written by Toni Johnson

STORY LINK GBP AUD Forecast: Pound to Australian Dollar Exchange Rate Losses Predicted; US Dollar Recovers

The British Pound to Australian Dollar (GBP AUD) Exchange Rate Forecast May 2014: The Australian Dollar (currency:AUD) enjoyed a pronounced bout of support during yesterday’s session following the announcement from the Antipodean nation’s centre-right government that it is set to drastically reduce its deficit from AU$50bn down to $30bn. The reduction will be achieved through the tried and tested method of tax increases and spending cuts – a cocktail which market participants have shown a great appetite for during recent years.

The Australian Dollar exchange rate forecast shows further gains for Aussie

The upshot of the news saw the Pound Australian Dollar exchange rate drop and settle below the psychologically important 1.8000 GBP/AUD threshold, dipping to as low as 1.7954 GBP/AUD during the middle part of the European session. The Aussie is forecast to enjoy further gains moving forward as investors vote with their feet in support of the Australian unit. Kate Carnel the head of the Australian Chamber of Commerce and Industry welcomed the plan, observing that, ‘it's a budget that delivers short-term pain for all of us, including short-term pain for business, but there is significant long-term gain for Australia.’

US Dollar recovers, the GBP/USD drops to a weekly low

Elsewhere, the US Dollar firmed during the second half of yesterday’s trading day, in spite of a disappointing set of Advance Retail Sales data for last month. The market’s reaction to the lacklustre shop sales data for April suggests that, despite her protestations, they feel that Federal reserve Chair Janet Yellen considers her Bank to be on a set path to taper its Quantitative Easing programme. GBP/USD dropped to a weekly low of 1.6821 following the release.

Looking ahead, the keynote publication as far as investors holding Sterling-denominated assets are concerned, comes this morning with the publication of the Bank of England’s latest Quarterly Inflation Report. The Pound could enjoy strong support if the missive suggests that UK interest rates will be on the way upwards sooner than April of next year, (the current best-guess according to futures markets). Such an outcome could readily send the Pound euro exchange rate up through the 1.2300 GBP EUR barrier.

The current mid-market Pound Sterling / Australian Dollar exchange rates are as follows: (14/05/2014)

- The Pound Sterling to Australian Dollar exchange rate is trading down -0.21% at 1.79368 GBP/AUD.
- The Euro to Australian Dollar exchange rate is trading down -0.31% at 1.45942 EUR/AUD.
- The US Dollar to Australian Dollar exchange rate is trading down -0.4% at 1.06373 USD/AUD.
- The Australian Dollar to Pound Sterling exchange rate is trading up +0.21% at 0.55751 AUD/GBP.

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TAGS: American Dollar Forecasts Australian Dollar Forecasts Daily Currency Forecasts