Australian Dollar Rises After Home Loan Data Beats Predictions as GBP Shows Resilience

Pound to Australian Dollar Forecast: RBA Meeting Minutes Predict a Bleak Future Ahead

Yesterday saw the Australian dollar get back on track as it edged over the pound following positive news from its economic data front. The Australian home loans figure beat forecasts for December as the figure rose from -0.8% to 3.5%. The GBP/AUD exchange rate ended trading at around $AU1.925. Meanwhile, despite losing ground to AUD, GBP saw a solid recovery to start the week as the currency confirms an ongoing resilience shown by the pound.

AUD Sees a Spike After Positive Home Loans Data

AUD was offered a helping hand yesterday as the December home loans figures were released. The figures came in above expectations, rising from -0.8% to 3.5%. This was a huge surprise to the market and helped the AUD rally, leading to the currency edging over the pound. Westpac Senior Economist, Matthew Hassan noted that the detail highlights a few aspects of the rebound through the second half of 2019. First of all, the upturn is now seeing both prices and volumes raising, whilst owner-occupiers are continuing to lead the way, the total value of loans to this segment are up 23% since May, with loans to first time home buyers outpacing slightly.

Yesterday also saw the release of December’s Australian Investment Lending for Homes report increase, the data showed that the figure had risen from 2.5% to 2.8%. This news boosted the market’s confidence further in the Australian economy. However, the AUD’s gains continue to be limited by China’s coronavirus outbreak, as markets become increasingly concerned over the impact that the disease will have on the world’s second largest economy.

Pound Sterling Sinks Following Flat UK Growth Figures in December

GBP failed to make headway on AUD yesterday after the UK’s flash GDP report was released. The report confirmed fears and returned a value of 0% for growth. This result further damaged an already struggling UK economy as the currency struggles to find support as the outlook looks uncertain post-Brexit. The UK also saw the release of the UK’s retail and manufacturing reports for December. Both reports returned negative values of a -2.5% easing for manufacturing and a drop from 1.7% to 0% for the retail sector.

Brexit negotiations are likely to dictate the direction GBP heads in in the upcoming months, but with a continuing run of economic releases, GBP is likely to lose favour with investors.

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