GBP/AUD Forecast (Matthew Vassallo)

Australian Dollar Forecast: AUD Holds Firm Against US Dollar

It’s been a volatile day for GBP/AUD rates, with a near three cent swing on the pair from high to low. The AUD had made gains earlier this week and with a move under the 2 level yesterday, it was very feasible that the slide would continue.

The Pound has found some support this afternoon following poor Chinese inflation data, with the pair just recovering about this threshold. Problems in China will inevitably have a knock on effect on the Australian economy and this is my overriding concern as to why the AUD has not made the same impact against sterling, as the other major currencies over the past couple of months. Despite the problems mentioned the AUD has moved away from the lows we saw last year and due to the downturn in UK economic data and the Bank of England’s (BoE) changing stance, it is likely GBP will struggle to make any sustained impact in the short-term.

This view became even more apparent following the release of Australia’s unemployment figures, which were released overnight. Despite these coming out much worse than expected the AUD held its position. This to me indicates that the current trend is based far more on the negative perception of the UK economy, rather than any major confidence in the Australian one.

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