Fighting Aussie Pound Exchange Rate As Investors Move Away From Pound Sterling
Despite lingering optimism about the UK’s economic outlook, the Australian pound (GBP / AUD) exchange rate fell this week and remains low. The Australian Dollar (AUD) was able to capitalize on the losses of the Pound Sterling (GBP).
Last week was another bullish one for the GBP / AUD as concerns about the coronavirus in the market drove the Australian dollar down. GBP / AUD rose from 1.80 to 1.81 in a week, and the interbank rate even peaked at 1.82 in 2021.
However, the move this week has been relatively bearish. GBP / AUD fell as investors sold the pound and the pair continues to fall today. GBP / AUD is trading in the interbank area of 1.80 at time of writing and below last week’s opening levels.
For now, investors are eagerly awaiting additional Australian services data, as well as expected UK growth and news of the economy opening next week.
Pound (GBP) is struggling with exchange rate, despite outperforming forecasts construction data
The pound was sold this week. Investors are selling the British currency back at its best profit-taking level after several weeks of strong performance.
This is partly due to the fact that markets are beginning to perceive the British currency as overvalued. Other countries increasing coronavirus vaccinations are also reducing the pound’s relative appeal.
The recent UK data also had little impact on the attractiveness of the pound sterling. Yesterday, UK services PMI data fell slightly short of expectations, and today’s UK Construction PMI was largely unjustified.
Tim Moore, director of economics at IHS Markit, said there was a “spike” in construction volumes last month:
“The increasingly optimistic UK economic outlook has created a halo effect on building demand and the perceived viability of new projects.”
Australian Dollar (AUD) Benefits From Opponent Weakness Despite Lack of Fresh Support
The Australian dollar has seen more stable demand this week. The currency was selling last week amid renewed fears of a ‘third wave’ of coronavirus, but hopes for a recovery once again support the Aussie in recent sessions.
Markets remain broadly bullish amid hopes that major economies, including the UK and the US, are recovering from the coronavirus pandemic.
Concerns over Australian trade have also had little effect on the Aussie movement this week. The Australian government has indicated that it may consider providing financial assistance to mining groups owned by the GFG.
According to Simon Birmingham, Australian Treasury Secretary:
“Governments are monitoring this situation very closely and are really thinking and planning contingencies that would be reasonable under the circumstances.”
Pound Australian Dollar (GBP / AUD) exchange rate may change at the end of the week on Australian data
Most of the important data has already been released this week, but several rather influential Australian environmental statistics are due to be released in the Asian session on Friday.
Ai Group’s Australian services PMI data could be more influential than Markit data if it surprises investors. Australia’s building permits data for February is also due to be released.
Strong Australian data could make it easier for the Aussie to maintain some of its strong performance this week and put pressure on GBP / AUD.
On the other hand, weak Australian data could ease the GBP / AUD recovery this week’s losses.
However, amid a lack of unexpected data on Australia, investors will wait for next week, when the UK continues to resume economic growth and the data on growth in the UK is released.
Of course, continued shifts in risk sentiment will continue to affect the Australian dollar (GBP / AUD) exchange rate.