By Rob Samson

The Aus dollar (AUD) is lower across the breadth of the foreign exchange rate markets on Thursday as investors choose to ignore some solid retail sales figures released earlier in the day.

The pound sterling to Australian dollar exchange rate (GBP/AUD) is trading 0.22 pct higher at 1.8522 in line with recent pro-GBP momentum.

The euro Australian dollar rate is meanwhile 0.36 pct higher on a daily basis at 1.5308 while the Australian to US dollar exchange rate is 0.15 pct lower at 0.8888.

(Note: The above quotes are taken from the wholesale spot markets. Your bank will charge a spread on the rate at their discretion. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.)

Keep an eye on the British pound in coming hours

The pound sterling is likely to feel increased volatility in coming hours with the highly anticipated Central Bank meetings due. Our live coverage of the proceedings is found here.

At 12:00 we have the Bank of England's MPC meeting and at 13:30 we have the European Central Bank's Press Conference to confirm whether there will be any changes to monetary policy in either the UK or the EU.

"Eagerly awaited by the market, no major changes are expected from either meetings, although market players will be heavily scrutinizing both releases for clues as to future movements or changes in interest rates and forward guidance," says Sasha Nugent at Caxton FX.

"The BoE is unlikely to change interest rates, but any accompanying statement will be monitored closely for clues about changes to the central bank’s forward guidance," says Nugent.

This event could shift levels in GBP/AUD but we would imaging the current trend is well-entrenched and any pullbacks would be short-lived.

Pound vs Aus dollar exchange rate

The pound gained another cent against the Australian dollar yesterday, adding to Tuesday’s gains, as the Aus dollar continued to be hampered by the prospect of QE tapering in the US.

Strong Australian retail sales and building approvals data overnight failed to offer the Australian currency any support, and the pound remains in control this morning ahead of the Bank of England policy decision due at noon.

Australian dollar weakness entrenched

The key rate for the Australian dollar remains the AUD/USD, and it appears we could be about to see it settle below the important 0.9 level.

"The AUD/USD is starting to look quite comfortable now below .9000 and if we can spend an entire week below this important psychological level then the bears will certainly be able to generate fresh momentum very soon," says Sean Lee at FXWW.

Indeed, currency markets continue to reference the charts when basing their trading decisions - note even positive economic data out of Australia was able to boost the AUD.

Australian retail sales higher

Nominal retail sales rose 0.7% m/m in November, which was stronger than market expectations (mkt: +0.7% m/m).

"Overall, the pick up in retail sales growth in the past four months suggests that lower interest rates, rising asset prices and the lower AUD are providing impetus to domestic retail spending. Indeed, even if retail sales were unchanged in December, Q4 retail sales would have risen a solid 1.8% in the quarter," say ANZ Research.

The outlook for the Australian dollar remains heavy and we would expect to see further declines.

However, the path will not be smooth so watch out for those spikes higher.