The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate slipped today owing to a rise in US Dollar (USD) activity; the Pound (GBP) has similarly tanked against its rivals as well.
The Australian Dollar declined marginally against the Pound Sterling (AUD/GBP) today and has posted worse losses of -0.2% against the New Zealand Dollar (AUD/NZD) and -0.4% against the Canadian Dollar (AUD/CAD), the Chinese Yuan (AUD/CNY) and the US Dollar (AUD/USD).
One of the main causes for the decline of the ‘Aussie’ today has been a speech by Federal Reserve Bank of Atlanta President Dennis Lockhart, who made what can only be considered hawkish statements regarding the possibility of the Federal Open Market Committee (FOMC) implementing a US interest rate rise before the end of the year. For reference, a meeting in October and one in December are the only remaining opportunities left in 2015.
Closer to home, plans to raise the Goods and Services Tax (GST) in order to solve a number of financial issues for the Australian economy have been met with fierce opposition by Chris Bowen, Shadow Treasurer of the Australian Labor Party. Bowen has argued that of all the problems that Prime Minister Malcolm Turnbull may hope to solve by raising the GST, only one can be realistically afforded.
Bowen compared the situation to employee income, saying: ‘It’s like when you get a raise in your salary and you think of five things you’d love to do with the extra money. Deep down you know you can only do one’.
The Pound Sterling (GBP) has trended narrowly in the positive against the Australian Dollar (GBP/AUD) today, although like the ‘Aussie’, Sterling has fallen against many of its competitors. The detrimental factor for the Pound today has been a rise from £0.7bn to £12.1bn in the UK Public Sector Net Borrowing Excluding Banking Groups, and a rise from -£0.1bn to £11.3bn for the base variant, both in August.
Both expansions of UK debt exceeded predictions and the ‘slight’ -£0.2bn reduction in the Public Finances figure for August has failed to offset this disheartening set of results. The results even overshadowed yesterday’s statement by Bank of England (BoE) Deputy Governor Sir Jon Cunliffe that UK interest rates should rise on the next BoE Monetary Policy Committee (MPC) decision.
The Pound has fallen by over -0.4% against the US Dollar (GBP/USD), the Hong Kong Dollar (GBP/HKD) and the Israeli New Shekel (GBP/ILS) today; Sterling’s greatest loss has been by -0.9% against the Japanese Yen (GBP/JPY) while a notable gain has been by 0.9% against the South African Rand (GBP/ZAR).
As early as Tuesday, the Australian Dollar (AUD) and the Pound Sterling (GBP) have published their biggest economic results of the week, and the only remaining releases of note are Wednesday’s Australian Conference Board Leading Index for July, the Australian Skilled Vacancies for August and on Thursday the UK BBA Loans for House Purchases.
Outside of these scarce few announcements, any further agreements secured by Chancellor George Osborne in China or Bank of England (BoE) Monetary Policy Committee (MPC) announcements are likely to move the Pound in the pairing, while a major movement in the price of iron ore could shift the ‘Aussie’ likewise.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.4595 and the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in the region of 2.1770 today.
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