The AUDGBP exchange rate was 0.30% lower on Friday as the pair failed to make it to the 0.5600 resistance again. The Aussie dollar has seen a strong bounce this week from 0.5500 as an unwind in sterling positions spread across currency markets.
AUD to GBP trades at 0.5550 and a BoE quarterly report is the only data release for the day.
IMF Upgrades Australian Growth
Australia’s Treasurer Josh Frydenberg cheered the strength of the country’s economy with the latest International Monetary Fund upgrade of growth forecasts.
Australia’s gross domestic product is expected to grow by 4.5% this year, which is a full percentage point higher that the 3.5% previously set in January. Frydenberg called the forecasts a milestone in Australia’s recovery. He also said the country was in a different position to the UK and USA, “where the virus ran rampant”.
Like its forecasts for other nations, the IMF sees GDP in Australia at a slower 2.8% for 2022. The group also increased its outlook for the British economy with an from 4.5% to 5.3% in 2021.
For the AUD to GBP outlook, the valuation will depend on the pace and scale of reopening. The UK is getting close to a full reopening, while Australia is prone to snap lockdowns over one or two cases and that could hinder its path as it enters the autumn and winter seasons.
Banks Show Caution After RBA Comments
Australian mortgage brokers have said that banks are slowing down on home lending recently after the Reserve Bank of Australia (RBA) said it was watching the sector closely. An ongoing surge in new lending is a risk for the Aussie dollar after the recent action by New Zealand to curb speculation, but brokers say the lending is not high risk, while they do not see regulatory caps on home lending anytime soon.
Australian house prices are moving at their highest pace since the 1980s and fears of a two-tiered economy have arisen with speculators keeping first-time buyers out the market.
Today will see a release of the latest Bank of England (BoE) quarterly report, but there should be little to surprise traders. Yesterday’s ECB minutes will likely be a guide as the bank said inflation would be transitory and would let rates rise with higher growth. Any move higher in rates before the recovery is complete would see the bank take action.
The BoE may update their outlook for UK growth along the lines of the Inernational Monetary Fund (IMF) upgrade as the last quarterly report did not account for the fast rollout in vaccines in the country.
The AUDGBP is still stuck in the 100 pip range that has dominated the pair since the end of January as traders cannot make their minds up on the path ahead. Economies are in a bit of a holding period where the worst of the economic recovery and stimulus fears have receded and the market is looking for a new catalyst to the move the exchange rate.
Speak to us today about your upcoming currency exchange to see how the above factors could impact it.