The Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate fell almost 1% overnight during the offshore session with the release of the UK Preliminary Gross Domestic Product (GDP) Figure for the final quarter of 2014, showing the best annual growth the UK has seen since 2007.
The AUD/GBP Exchange Rate fell to as low as 0.5205 during the offshore session.
The UK office for National Statistics (ONS) released the Preliminary GPD figure for the fourth quarter of 2014 last night. The figure was considerably lower than the expected reduction. Analysts had predicted a reduction from 0.7% to 0.6% however the actual figure for the quarter was 0.5%.
This weaker figure has been attributed to the construction sector, which produced a contraction figure for the last quarter.
Despite this last quarter slow down the annual growth for the UK economy is at 2.6% which the ONS stated in the accompanying release is the best annual expansion figure since 2007. Before the Global Financial Crisis (GFC) hit the UK.
This figure followed on from last week’s positive Unemployment results for the UK, which saw the figure fall to 5.8%; its lowest level in 6 years. The UK’s Consumer Inflation was also a significant miss, falling from 1% down to 0.5%.
The recent string of data out of the UK is causing mixed reports, with experts disagreeing about the state of the UK economy, many warning about the risks of the Euro-Zone slow down impacting the health of the UK. Chris Williamson Economist for Markit, did comment he believed that the UK economy was looking positive, ‘There are lots of reasons to believe that growth could pick up again a favourable environment of rising wages, low inflation and low interest rates, meaning the UK should enjoy another year of solid economic growth in 2015.’
AUD/GBP Exchange Rate Forecast
The UK election is only 100 days away and all the most recent economic indicators released out of the UK will take up much focus and discussion within the election campaign.
Today provides the release of Consumer Price Index (CPI) for Australia. This figure is being looked towards with plenty of anticipation as CPI figures for many of the World’s major economies (including the UK, New Zealand and Canada) have all reported significantly worse figures than was expected over the last week. These results primarily being attributed to crude oil pricing.
The forecast for this figure is a reduction for the quarter from 0.5% to 0.3%. However, if the Australian figure is to come in lower than expected we are likely to see further sell off of the Australian Dollar.
This figure will also give some indication as to the Reserve Bank of Australia’s (RBA) intentions at their first annual meeting of the year, next Tuesday. If this figure is a significant miss economists will be speculating at the necessity of Interest Rate cuts for Australia.