AUD/GBP and AUD/EUR Exchange Rate Forecast: Australian Dollar Jumps as European Data Underperforms

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The Australian Dollar to Pound Sterling (AUD/GBP) and Australian Dollar to Euro (AUD/EUR) exchange rates recorded significant gains during Thursday’s European trading after European data disappointed investors.

The Pound Sterling experienced a bumpy week when UK figures failed to meet forecasts. Moreover, Thursday’s Bank of England (BoE) interest rate decision saw the current 0.50% benchmark remain in place.

Industry expert Samuel Tombs commented: ‘Signs that wage growth is starting to strengthen and labour market slack is continuing to decline suggest that a move to raise Bank Rate before the end of this year remains on the cards.’

The Eurozone saw Industrial Confidence contract further than economists had forecast in December from -4.3 to -5.2. However, Economic Confidence remained unchanged at 100.7, defying predictions for a hike to 101.2. The stagnation has been accredited to economic fragility and uncertainty in the run-up to the European Central Bank’s (ECB) next meeting to discuss whether it should begin taking more aggressive action.

Industry expert Nick Kounic commented: ‘Growth is very weak. Policy makers need to do what they can to support demand. The economy can do with more monetary stimulus.’

Surprisingly, perhaps, Eurozone Retail Sales ecostats remained relatively strong. October’s figure was positively revised to 1.6% and November’s 1.5% was far higher than the forecast drop to 0.2%.

Economist Christoph Weil stated: ‘The massive fall of prices for crude oil is a blessing for the sluggish economy in the Eurozone. Consumers are paying much less for petrol and heating oil and suddenly have more money in their pockets for buying other items. And business are also glad, thanks to the lower energy prices, their production costs are declining.’

The Australian Dollar was empowered earlier on in the week when China fast tracked 300 building projects which totalled a massive 7 trillion Yuan. Furthermore, China’s HSBC Purchasing Managers Index (PMI) increased to 53.4 in December from November’s 53.0, helping to counteract speculation that the Chinese economy was entering a slowdown.

Analysts commented: ‘This is welcoming news for China at a time where fears of a slowdown are creeping into the economy. It may also help cover for the recent and expected future decline in the housing market.’

AUD/GBP and AUD/EUR Exchange Rate Forecasts

Australia’s AiG Performance of Construction Index is released later in Thursday’s European session closely followed by Australian Retail Sales ecostats. Retail Sales are forecast to grow by 0.2% in November on the month after October’s 0.4%. However, any better-than-forecast figures could see the ‘Aussie’ rally higher in its exchange rates against the Euro and Pound Sterling.

Friday will be of influence for both the Euro and the Pound Sterling when German Industrial Production, German and UK Trade Balance, UK Industrial Production, Manufacturing Production are all released.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is presently trending in the region of 0.5386 with a market movement of +0.73%. The Australian Dollar to Euro (AUD/EUR) exchange rate is reaching 0.6893 after moving by +1.0%.

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