Pound to Australian Dollar Rate Forecast: GBP/AUD Exchange Rate Falls as Investors Adjust Bets for Rate Hikes

Modified: Monday, 2 February 2015 23:10 BST - Written by Toni Johnson

STORY LINK Pound to Australian Dollar Rate Forecast: GBP/AUD Exchange Rate Falls as Investors Adjust Bets for Rate Hikes

Pound Softens Versus the Australian Dollar (GBP/AUD) Exchange Rate as Investors Adjust Bets for Rate Hikes

The Pound fell against the Australian Dollar on Monday as investors priced in a UK interest rate hike in 2016 rather than 2015.

Expectations for increased borrowing costs slipped as factory prices declined, pressuring inflation lower in the process.

Falling oil prices have seen manufacturer’s expenses lessen and the commodity consequently accounts for a lot of the factory price tumble.

With UK inflation dipping temporarily below 0.0% in coming months looking increasingly likely, the entirety of the Monetary Policy Committee now believe that interest rates should remain on hold. Economic advisor Martin Beck commented: ‘The scale of these disinflationary pressures makes us more certain that CPI inflation will spend a good portion of this year in negative territory. Given the BoE’s concerns that low inflation could become entrenched, results like these [falling inflation figures] make it highly likely that interest rates will stay at 0.5% throughout this year.’

Today's Australian Dollar Exchange Rates

The Australian Dollar to Canadian Dollar exchange rate is -0.6 pct lower with a conversion rate of 1 AUD equals 0.98141 CAD.
The Australian Dollar to Euro exchange rate is 1 AUD equals 0.68807 EUR.
The Australian Dollar to Pound Sterling exchange rate today is converting +0.65 per cent higher at 0.51911 AUD/GBP.
The Australian Dollar to New Zealand Dollar exchange rate today is converting -0.21 per cent lower at 1.06881 AUD/NZD.

The Australian Dollar to US Dollar exchange rate today is converting +0.31 per cent higher at 0.78040 AUD/USD.

However, Markit’s UK Manufacturing Purchasing Managers Index registered growth in January, climbing from 52.5 to 53.0. Economist Lee Hopley commented: ‘The domestic market remains a key driver of growth, but bucking recent trends, there was also a modest increase in demand from overseas. However, we will need to see this sustained in the coming months before we can call it a turnaround in the sector’s export performance.’

Meanwhile, the Australian manufacturing sector also enjoyed an upswing in January, rising from 46.9 to 49.0. However, the sector still resides below the 50.0 benchmark denoting contraction. AiG, who undertake the survey, stated: ‘This [the rise] indicated broadly stable conditions across the manufacturing sector this month... Respondents to the Australian PMI indicated the further depreciation in the Australian Dollar has boosted export volumes over recent months.’

Australian Dollar to Pound Exchange Rate Forecast

The Australian Dollar could experience movement on Tuesday with the release of domestic Trade Balance and Building Approvals ecostats.

Any narrowing of the nation’s deficit could allow the ‘Aussie’ to rally.

Meanwhile, the Reserve Bank of Australia is also expected to announce its interest rate decision—an event that could cause major fluctuations for the commodity currency.

The Pound could experience further movement on Tuesday when UK Construction PMI is released.

Wednesday could be a little more influential for Sterling with both Services and Composite PMIs due for publication, as well as the UK Shop Price Index and Lloyds Business Barometer.

In addition, any drastic political developments could alter the Pound in the run-up to the May general election.

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 Currency Predictions Daily Cur Forecasts