Pound to Australian Dollar Exchange Rate Trends in Narrow Range - Christmas Trading Quiet

Modified: Tuesday, 23 December 2014 11:40 BST - Written by James Fuller

STORY LINK Pound to Australian Dollar Exchange Rate Trends in Narrow Range - Christmas Trading Quiet

The Pound Sterling to Australian Dollar exchange rate was stuck trending around the 1.9184 level on Monday as a lack of influential economic reports from either the UK or Australia tempered fluctuations.

Traders are also winding down ahead of Christmas. Last week the Australian Dollar came under pressure as domestic New Motor Vehicle sales slid in November, the ANZ Roy Morgan Consumer Confidence Index dipped from 110.4 to 110.2 and Australian skilled vacancies fell by -0.8% on the month in November. While the Australian Dollar derived some strength from the Reserve Bank of Australia’s meeting minutes (as they diminished concerns that the central bank could be looking to cut interest rates early next year), the Pound posted widespread gains in the second half of the week as the UK’s employment and retail sales reports exceeded expectations.

The GBP/AUD spent much of Monday trending around 1.9176, having edged slightly lower as oil prices increased. The Australian Dollar also steadied against the US Dollar after losing out following the Federal Open Market Committee policy meeting. That being said, economist John Peters noted; ‘Commodity currencies, like the AUD and NZD, could remain under downward pressure until commodity prices stabilise. We see the AUD back in 0.70 US cents in the next few months.’ Meanwhile, industry expert Boris Schlossberg stated; ‘It’s been a very choppy consolidative session on the last trading day of the week as many dealing desks have started to close their books for year end and the economic calendar has thinned appreciably. Most of the majors have spent Asian and early European trade marking out 30-40 pip ranges in lacklustre directionless trading.’

A recent report also intimated that the price of iron ore, Australia’s main commodity, could drop to US$63 a tonne. The report, compiled by the Department of Industry observed; ‘"The current market oversupply is expected to prevail through the start of 2015 in response to a likely ongoing cyclical downturn in China's housing sector. More of China's production is expected to exit the market, particularly over the northern winter, when operating costs typically rise, although a longer period of even lower iron ore prices may be required than previously expected to push supply out of the market.’

The only Australian report worth noting this week is the nation’s Conference Board Leading Index for October, due out tomorrow. The gauge registered a -0.3% decline in September. However, during the Australasian session China’s Conference Board Leading Index could cause GBP/AUD movement. Investors will also be taking a keen interest in the UK’s BBA Loans for House Purchase figures and the nation’s third quarter GDP data.

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