Outlook for Pound Sterling to Australian Dollar Exchange Rate: "The Australian dollar faces a week of concentrated event risk"

• The Pound Sterling to Australian Dollar exchange rate is 0.62 pct lower than seen at Friday night's close at 1.7316.
• The Australian Dollar to Pound Sterling exchange rate is at 0.5775.
• The Pound Sterling to New Zealand Dollar exchange rate is 0.66 pct lower at 1.9932.
• The New Zealand Dollar to Pound Sterling Rate is at 0.5017.

NB: The above are spot market quotes, your bank will subtract their own spread when passing their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here, or use our custom wholesale vs retail currency converter.

Driving the Pound Sterling higher today is a strong Manufacturing PMI reading. Below we focus on the issues driving AUD and NZD.

Outlook for Australian Dollar: Concentrated event risk for AUD lies ahead

Gareth Berry at UBS says forex market participants will be wary of the potential for high volatility for the Australian currency this week:

"Once a quarter, the Australian dollar faces a week of concentrated event risk. It must run the gauntlet between monthly and quarterly domestic economic reports, an RBA policy decision, China PMIs, and a US payrolls report.

"This time around US payrolls is especially significant given its direct bearing on the timing of FOMC tapering. There is the added complication of an Australian Federal Election on Sep 7 too, although we do not expect any material currency reaction to the outcome.

"So the stakes are high, but so far so good. China’s PMI hit a 16-month high over the weekend.

"That does not fundamentally change our bearish outlook though − a weaker Australian dollar is still needed to facilitate domestic economic rebalancing and if it does not weaken naturally of its own accord, the RBA has plenty ammunition left to help make it happen. That message is likely to come through loud and clear in Tuesday’s policy statement."

Australian / New Zealand Dollars supported by Chinese data

James Mills at UKForex says the Australian Dollar and New Zealand Dollar have today found support from a return to form for the Chinese economy:

"A report from China showed Manufacturing PMI data for August rose from a previous months reading of 47.7 to come in at 50.1.  While this was slightly below the expected 50.2 this is still a big improvement from the previous month’s figures and both the AUD and NZD found support.

"Combined with strong improvements in Australia Building permit approvals the Ozzie staged a small recovery from an overnight low against the USD of 0.8925 to current levels of 0.8980.  The Kiwi has also added 0.65 cents to its overnight night price and is currently sitting at 0.7815 against the USD."

Australian housing data

Residential building approvals rose more strongly than expected in July, mostly unwinding the weakness recorded over the past two months. Much of the strength was in the volatile units, apartments and townhouses component, although detached house approvals also rose solidly.

"Despite today’s encouraging result, trend growth in dwelling approvals remains soft in 2013, despite improved housing market activity and lower interest rates. This suggests a sense of developer and owner-builder caution remains, likely reflecting a softer economic outlook, heightened household debt aversion and ongoing job security concerns. Consequently, the cyclical upturn in residential building activity is likely to fall short of robust forecasts in the near term," says David Cannington at ANZ Research.