The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate remained near two-week-lows during Thursday’s session. Confidence that Britain would vote to ‘Remain’ in the European Union increased as the British public took to the polls.
With the British public voting on the historic EU Referendum throughout the day, investors throughout the foreign exchange market made risky bets and investments with less than a day to go until the results.
While the primary reasons for the Australian Dollar’s bullishness against most majors is related to risk-sentiment increasing on the prospect of a ‘Remain’ result, the AUD/GBP exchange rate traded at a deadlock during Thursday’s European session.
After briefly recovering to around 0.5116 earlier in the day, the pair fell flat after the final pre-Referendum poll revealed a lead for ‘Remain’. AUD/GBP trended in the region of 0.5080 at the time of writing.
Markets pricing in a ‘Remain’ result has led to a huge increase in risk-sentiment, allowing the risk-sensitive ‘Aussie’ to gain. However, recent Australian news has been positive and may have also helped the currency advance.
Wednesday’s Westpac leading index report improved from a revised 0.14% to 0.21%. The currency also remained sturdy after the Reserve Bank of Australia’s (RBA) minutes earlier this week, which took a surprisingly hawkish stance despite investors initially expecting a new interest rate cut to occur in the near future.
During Thursday’s European session, citizens across the UK headed to polling booths in order to cast their votes in the highly anticipated EU Referendum.
While investors are unlikely to make many considerable movements with news of results still so up in the air, a new poll released by Ipsos MORI on Thursday morning influenced Sterling positively.
In what is being cited as the first poll to ever be published on polling day, the results came in at 52% for ‘Remain’ and 48% for ‘Leave’.
The phone poll indicated that ‘Remain’ had strengthened by 5 points since its last results, while ‘Leave’ had weakened by 5 points. The poll excluded undecided votes.
Another poll released shortly afterwards by Populus had ‘Remain’ at 55%, and ‘Leave’ at 45%.
This was enough to send the Pound higher against many rivals, but not considerably as investors were cautious ahead of Friday’s Referendum results.
Sterling has generally maintained the advances it made on Monday and Tuesday, indicating that market confidence in a ‘Remain’ vote is strong.
The Australian Dollar and Pound may both react similarly to the results of EU Referendum, and as a result it’s difficult to predict whether the volatile AUD/GBP exchange rate will gain or slip.
In the event of a ‘Remain’ vote, both currencies will likely soar across most of their rivals as an increase in risk appeal works alongside currently strong appeal for both the Australian Dollar and Pound.
On the other hand, a ‘Leave’ vote would cause both currencies to drop as investors seek out ‘safe-haven’ currencies like the US Dollar and Japanese Yen. The Pound would likely lose out against the ‘Aussie’ in this outcome as it plummets towards new lows across the board.
Data calendars are set to be quiet until the end of the week, but investors are likely to focus entirely on the EU Referendum result regardless.
At the time of writing, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate trended in the region of 0.5080, while the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate traded at around 1.9670.
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