Pounds To Australia Dollar July 2013 Outlook

The pound rallied against the Aussie dollar adding 7.6% in June!

Experts view the drop in the Aussie dollar due to a combination of lower commodity and precious metals prices, risk aversion & stronger than expected UK economic data. Rates remained unchanged although in Australia there is a higher likelihood of a decrease in the coming quarters.

 

Most UK economic numbers were better than expected in last month. The BOE left the benchmark Official Bank Rate unchanged last month and in a statement recently explained that “At its meeting today, the Committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May Report. The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”

Australia saw some strong economic figures last month with employment change increasing for the second consecutive month, showing an increase of +1.1K versus an expected decline of -9.8K. Unemployment also when down from 5.6% to 5.5% along with strong current account figures vs expectations. The key issue though are numbers such as Home Loans and GDP which are below forecasts.

The cash rate in Australia remains at 2.75% and further cuts are expected to further devalue the dollar which Glen Stevens (RBA Governor) believes is ‘overvalued’.He stated that “It is possible that the exchange rate will depreciate further over time, which would help to foster a correction in the economies growth.”

The combination of strong UK conditions and expected rate cuts in Australia provides conditions that may see the pound continue to appreciate against the Aussie dollar.
Thank you Ozforex for providing background information used for this article.