Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast: Risk Aversion Continues to Weigh on ‘Aussie’

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Pounds Sterling (GBP)

Sentiment towards the Australian Dollar (AUD) has continued to weaken ahead of the weekend, with weak US data failing to dampen the odds of a 2015 interest rate rise from the Fed.

AUD/GBP Exchange Rate on Downtrend following Increased Odds of 2015 Fed Interest Rate Rise

Following the unexpectedly hawkish Federal Open Market Committee (FOMC) statement published mid-week the ‘Aussie’ (AUD) has remained generally soft. Market risk aversion pushed the antipodean currency onto a persistent downtrend in the immediate aftermath of the suggestion that the Fed could move to raise interest rates in December. As the Australian HIA New Home Sales figure showed a severe slump, contracting by -4.0% on the month, the AUD/GBP exchange rate extended its losses to reach a three-week low of 0.4617.

Both the UK Mortgage Approvals and CBI Reported Sales results on Thursday failed to offer any particular support to the Pound (GBP) by falling decidedly short of expectations. This evidence of weakening in both the domestic housing market and retail sales further fuelled speculation that the Bank of England (BoE) will not move to raise interest rates in the near term. However, thanks to the relative softness of the antipodean currency this was not significantly dovish to shore up the AUD/GBP pairing.

Dip in US Consumer Confidence Fails to Bolster Australian Dollar (AUD) Today

Ahead of the weekend there was little data to encourage a resurgence for the Australian Dollar, as traders were not sufficiently encouraged by slight upticks in the latest Producer Price Index and Private Sector Credit figures. Although the UK’s GfK Consumer Confidence Survey unexpectedly slipped in October and the shortfalls in fresh US data fuelled speculation that the Fed may not be in a comfortable enough position to begin the cycle of monetary tightening before the end of the year, the AUD/GBP exchange rate remained on a downtrend.

AUD/GBP Exchange Rate Forecast: Upcoming Central Bank Decisions to Drive Movement

Tuesday’s Reserve Bank of Australia (RBA) Rate Decision will be of particular interest for traders of the ‘Aussie’, as policymakers could indicate a willingness to make an interest rate cut in the near future in response to recent global economic developments. However, should Monday’s domestic Manufacturing PMI show the forecast increase in output and the tone of the central bank prove less dovish then the antipodean currency could rally in the new week.

Upcoming UK PMIs will also be driving the prospects of the Pound, although the primary cause of volatility for Sterling is likely to be Thursday’s Bank of England (BoE) Rate Decision and meeting minutes. If the Monetary Policy Committee (MPC) echoes the more hawkish tone of the Fed this could easily prompt a greater resurgence for the Pound.

Current AUD, GBP Exchange Rates

At time of writing, Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was slumped in the range of 0.4611, while the Pound Sterling to Australian Dollar (GBP/AUD) pairing was making gains in the region of 2.1666.

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