The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate pushed up by close to one and half percent yesterday, to trade around the highest level it has been in approximately 8 weeks. Yesterday and overnight, the value of Australian commodity-linked currency was supported through a 5% rise in Copper and it appears as though investors expressed a risk-on appetite early during this week of trading, driving up AUD/GBP exchange rate to trade at 0.5266 at 0800 AEST.
This morning the Australian economy will release the Conference Board Leading Index for January, an economic indicator that is used to forecast short to mid-term growth in the Australian economy. With a previous reading of 0.4%, the ‘Aussie’ (AUD) will look for an improvement to the previous reading in order for a continuation of it’s’ rally against the Sterling (GBP).
Chinese data in the form of the Manufacturing Purchasing Managers Index (PMI) is also scheduled for release today. Although the forecast is expected to be the expansion figure of 50.3, it represents slower growth to the previous month’s figure of 50.7 in the manufacturing industry in China. Any deviation from the expectation is likely to sway the AUD/GBP exchange rate; with a higher than expected figure likely to push the rate up and a lower than expected figure likely to cause a drop.
The most significant economic release over the next 24 hours concerning the AUD/GBP exchange rate will occur this evening out of the UK. The annualised Consumer Price Index (CPI) is currently sitting at the low level of 0.3%, largely due to falling oil prices. The forecast is that UK CPI will fall even further down to 0.1%.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast
The AUD/GBP exchange rate will be influenced in the short-term through the release of UK inflation data release tonight, UK Retail Sales figures later this week and possibly more importantly, the Reserve Bank of Australia’s (RBA) April Rate Decision early next month.
Tonight’s UK inflation data may put a stop to the recent trend of an increasing AUD/GBP exchange rate even if the CPI result eventuates in a decreased figure. A CPI result of 0.2% would be higher than the expectation and as such may cease the recent downward pressure being placed on the ‘Pound’ (GBP). A result of 0.0% or even deflation will surely cause the AUD/GBP exchange rate to surge.
Retail Sales for the month of February will be released Thursday evening out of the UK. The forecast is that this economic indicator will show a decrease to the annualised figure of 4.8% to 4.2%, demonstrating that there is little economic data to be released this week out of the UK that is set to support the value of the GBP.
The Reserve Bank of Australia (RBA) will be releasing their April Rate Decision in 2 weeks, on Tuesday 7th April. Economists and investors appear divided with their view as to the next move by the governing body, with the most recent poll slightly favouring the opinion that interest rates will be kept on hold at 2.25% after being cut by 25 basis points in February. A second month in a row of interest rates being placed on hold by the RBA should give further rise to the AUD/GBP exchange rate. The lift to the rate may be only temporary though as there is still strong speculation that interest rates will be cut further in Australia in the near future.