Today's Australian dollar to pound rate (GBP/AUD) edges further away from the best conversion levels seen over the last 6 months, as traders are firmly back in risk-off mentality.
The Australian dollar exchange rate complex experienced gains against the New Zealand dollar but lost ground to the the Pound Sterling after strong US data rocked the fx markets on Friday afternoon.
Advance Retail Sales figures were better-than-expected and although the University of Michigan Confidence survey result was worse, USD strengthened, weakening AUD and NZD and allowing GBP to advance.
Let's look at the winners/losers for the AUD crosses as we enter the weekend:
- The Aussie dollar fell 0.81 per cent against the surging Canadian dollar. Live rate
- One win for the AUD was against the CHF, which ended the week 0.15pct. Live rate
- The Australian dollar to euro exchange rate did manage to take advantage of the weak single currency and converted 0.3 per cent higher. Live rate
- The AUD to GBP spot rate fell 0.48pct as Sterling recovered on Friday's UK construction data. Live rate
- The Aus dollar fell against the Israeli Sheqel and HK dollar, 0.46 pct and 0.34 pct respectively.
- The AUD/NZD exchange rate saw a significant rise, ending the week 1.06 per cent in the green. Live rate
- Finally, the Australian dollar closed the session 0.3 per cent down on the day versus the US dollar and the South African Rand.
Australian Home Loans failed to grow at the rate expected, although they still accelerated on the previous reading, while investment lending and the Value of Loans both slowed considerably, keeping Australian Dollar weak against the British pound.
Reserve Bank of Australia (RBA) Governor Glenn Stevens gave a testimony yesterday, claiming that controlled inflation gave the bank scope to make further interest cuts if necessary, keeping GBP strong against AUD.
Before we continue with the news, here are today's fx rates for your reference;
On Thursday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
FX markets see the pound vs pound exchange rate converting at 1.
At time of writing the pound to euro exchange rate is quoted at 1.166.
FX markets see the pound vs us dollar exchange rate converting at 1.252.
At time of writing the pound to new zealand dollar exchange rate is quoted at 2.106.
Please note: the FX rates above, updated 25th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
GBP/AUD Exchange Rate News and Outlook
Low risk appetite is still hurting the Australian Dollar, keeping it low against the New Zealand Dollar and the US Dollar, while a more severely weakened Pound Sterling is allowing the Australian Dollar to make some advances.
The AUD is weak against NZD because of the higher trade volumes, meaning risk appetite affects the Australian Dollar more, while USD is strengthened by potential for a rate hike and GBP is still soft on poor GDP estimates.
Global stock markets have remained largely volatile this week, in spite of the temporary absence of trading on the Shanghai Composite Index, with the increased atmosphere of risk aversion weighing heavily on the Australian Dollar (AUD).
Commodity prices and mining shares have equally been dragged lower as bearish traders have attempted to mitigate fears of a persistent global slowdown, further denting the outlook of the Australian economy.
The AUD/USD exchange rate made some modest gains ahead of comments from Fed Chair Janet Yellen, as investors hoped that the policymaker would conclusively rule out the possibility of an imminent interest rate hike.
Although the latest Australian Consumer Inflation Expectation report showed no change in inflationary outlook this was ultimately not enough to support the Australian Dollar on Thursday, with a renewed surge in risk aversion.
With bearish sentiment prevalent and another near-term interest rate hike by the Fed not ruled out traders have been seeing little reason to buy into the softened AUD, as concerns mount over the domestic economy’s ability to endure negative global headwinds.
Given the current climate of caution Bill Evans, Chief Economist at Westpac, notes:
’Following the recent turmoil, markets are convinced that the Reserve Bank will be cutting rates by May, if not earlier.’
The increasing possibility of further monetary loosening from the Reserve Bank of Australia (RBA), in spite of recent solid data, has equally dented the appeal of the Australian Dollar.
Pound Sterling (GBP) Bearish after Lower NIESR GDP Estimate
Downside risks have been pulling Pound Sterling (GBP) down against rivals this week, particularly after the December Industrial Production figures demonstrated renewed weakness within the UK economy.
With the latest NIESR GDP estimate coming in lower than forecast at 0.4% rather than 0.6% the case appears to be strengthening for the Bank of England (BoE) to leave interest rates on hold for some time to come.
Uncertainty over the UK’s future within the European Union has also been mounting afresh ahead of next week’s summit of European leaders, at which Prime Minister David Cameron will be hoping to finalise a draft agreement.
Nevertheless, the relative weakness of the Australian Dollar has prevented the Pound Sterling to Australian Dollar (GPB/AUD) exchange rate from trending lower on Thursday morning.
NZD/AUD Exchange Rate Boosted by Stronger Manufacturing PMI
Dovishness has equally been afflicting the New Zealand Dollar (NZD) in recent days as the commodity-correlated currency struggles to prevent losses against many of the majors, with the outlook of the dairy industry rather bleak.
However, in spite of declining risk appetite the NZD/AUD exchange rate has been trending higher in the wake of a stronger-than-expected New Zealand Manufacturing PMI.
With the domestic manufacturing sector continuing to expand strongly the Reserve Bank of New Zealand (RBNZ) may be less inclined to loosen monetary policy in the near future, although traders remain confident that a further rate cut remains in store.
USD/AUD Conversion Trends Higher after Yellen Fails to Rule out Interest Rate Hike
Ahead of Wednesday’s testimony from Fed Chair Janet Yellen the US Dollar (USD) was on more bearish form, as pundits awaited greater clarity on the Fed’s monetary policy expectations.
However, while Yellen acknowledged that conditions were generally less conducive to tightening at present she equally maintained that the Federal Open Market Committee (see FOMC) remained open to the possibility of another interest rate hike in the coming months.
Consequently the US Dollar to Australian Dollar (USD/AUD) exchange rate has been regaining lost ground, as safe-haven demand has also seen investors flocking back to the strengthening US Dollar.