The UK Pound V Australian Dollar

[John from Moneycorp 1,053]

Sterling is steady this morning as final quarter GDP figures released beat expectations.

 

The British economy grew at a steady 0.6 percent year-on-year in the last quarter, beating the expected 0.5 percent forecast. Figures also show that the manufacturing sector grew by 0.7 percent, almost matching the services sector.

[John from Moneycorp 1,053]

The British prime minister's visits to the United States and Turkey and the US president's Muslim travel ban have made surprisingly little difference to exchange rates. Compared with Friday morning the pound is just about unchanged against the dollar, the lira and the other dozen most actively-traded currencies.

 

GDP

Provisional figures on Thursday for fourth quarter growth indicated a 0.6% expansion of Britain's gross domestic product in the fourth quarter of 2016. The UK number was a tick higher than expected.

[John from Moneycorp 1,053]

Sterling weaker over the past 24 hours.

 

Yesterday, the Bank of England kept rates on hold at 0.25 per cent and released its inflation report. Governor Mark Carney said that rates could still move up or down in the coming months, while inflation was not upgraded – and this led to to a sell-off in the pound.

[Ozzie 1,003]

Hi @John from Moneycorp. Had a quick look on your site - I notice the rates you quote on the landing page are interbank rates (ie not for individuals). Is there a section on your website where I can see the actual rates you offer to individuals? Forgive me if I've missed it. Can you see the actual rates without registering? Many thanks.

[John from Moneycorp 1,053]

Hi @John from Moneycorp. Had a quick look on your site - I notice the rates you quote on the landing page are interbank rates (ie not for individuals). Is there a section on your website where I can see the actual rates you offer to individuals? Forgive me if I've missed it. Can you see the actual rates without registering? Many thanks.

 

Thanks for your message.

 

As you have highlighted, the exchange rate on the currency converter is an indication one - registration with us is free/no obligation so you get get accurate quotes plus expert guidance on the best time to transfer your money. When you transfer your money, timing wise, is just as important as getting a good rate - the rate is moving the whole time and this can make a difference to the amount of Australian dollars (or pounds) you end up with.

 

You can register via this link here and also benefit from no transfer fees being a Poms in Oz member - http://moneytransfer.pomsinoz.com/

[John from Moneycorp 1,053]

Undervalued pound?

 

For two days on the trot the pound brought up the rear. Thursday's problem was the Bank of England governor Mark Carney: Friday's was the services sector of the UK economy. From Thursday's opening levels the pound is down by an average of -1.5%.

 

The Monetary Policy Committee decided on Thursday, as expected, to keep the bank rate unchanged at 0.25%. Mark Carney then went on to introduce the Old Lady's quarterly Inflation Report. In essence, he said inflation will overshoot its 2% target and the MPC will do nothing about it. Investors had been hoping for something a bit more hawkish than that so they offloaded the pound.

 

They studiously ignored the governor's observation that sterling had been trashed since the referendum, even though the economy is performing better than expected and Britain is still in the EU. Dr Carney came within an inch of saying that the selling has been overdone and the pound is undervalued. But he pulled the punch, so the pound went south and weakened.

 

Australian retail sales fell by -0.1% in December and China's services PMI was three ticks lower at 53.1.

[John from Moneycorp 1,053]

Yesterday, the UK Parliament took the expected step further towards activating Article 50 when the House of Commons signed off the Brexit bill to the upper house.

 

Not much is happening at the moment, data wise, to move the exchange rate considerably - the UK production and trade figures come out tomorrow.

[John from Moneycorp 1,053]

Exchange rate has been fairly static over the past 2-3 days.

 

UK production buoyant

 

Data for UK industrial and manufacturing production were considerably more punchy than forecast. They were helpful to sterling, as was the NIESR estimate of gross domestic product in the three months to January.

 

Britain's manufacturing and industrial output statistics have long proved difficult for analysts to predict. Too often there are surprises in one direction or the other. This time the analysts got the direction right but were way out on the scale of the rise. Monthly increases of 2.1% and 1.1% were much bigger than the expected 0.5% and 0.2%. There was also a positive surprise from the NIESR when it put growth at 0.7% for the January quarter.

[John from Moneycorp 1,053]

Australian Dollar top of the G10 Leaderboard in 2017

 

There is a lot of positive momentum surrounding the dollar thanks to strong commodity prices and business data out from the Australian Bureau of Statistics showing record profits from Australian companies. Key thing to watch this week would be the Q4 GDP data out on Wednesday - we could see the currency take a hit if this is another GDP miss like we saw with Q3. The pound on the other hand is losing ground on the back of political instability with Scotland potentially calling for an independence referendum. Should be an interesting week.

[John from Moneycorp 1,053]

Budget Announcement 2017

 

Today Philip Hammond delivered his first Budget statement as Chancellor and says “Budget provides strong, stable platform for Brexit". Contrary to his predecessors of recent years Mr Hammond announced higher economic growth than previously forecast, up from 1.4% to 2% for 2017. Following the trend inflation is also forecast to rise, increasing to 2.4% in 2017 and employment figures will also rise with a potential 650,000 expected to be in work by 2021.

 

Mr Hammond announced help for firms affected by increases in business rates, tax rises for the self-employed and forecast annual borrowing in 2016-17 to be £51.7bn, £16.4 bn lower than originally forecast.

[John from Moneycorp 1,053]

Yesterday, Nicola Sturgeon (First Minister of Scotland) announced plans to trigger second independence referendum on Scotland's membership of the United Kingdom.

 

There was an expectation this could weaken the pound a lot but we’ve only seen minor moves so far.

Edited March 14 by John from Moneycorp

[John from Moneycorp 1,053]

Better levels for the pound this morning against the Australian dollar - could be an interesting week ahead with Article 50 being triggered. 

[John from Moneycorp 1,053]

This week, the pound sprang back into life when the UK services sector purchasing managers' index came in a point and a half higher than forecast at 55.0. It was worth a quick half-cent to sterling, which came away as the day's winner.

We also saw this week that the Australian dollar took a step backwards after the Reserve Bank of Australia kept its benchmark Cash Rate on hold because the RBA once again refused to suggest where rates might go next.