The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate edged higher by around 0.15% on Tuesday afternoon.
With oil prices continuing to decline with no bottom-end in sight, market sentiment dampened considerably. This would, ordinarily, have a detrimental effect on the high-yielding South Pacific asset. However, demand for the safe-haven properties of gold caused the ‘Aussie’ (AUD) to strengthen versus many of its major peers.
The Pound Sterling meanwhile, is gradually recovering from an unjustified declination after inflation dropped below 1%. The fact that the Bank of England are likely to use this as an excuse to delay a rate hike, however, has seen the Pound struggle against many of its rivals.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5378.
With the US Dollar softer as traders temper bets as to the timing of a Federal Reserve rate hike, the safe-haven qualities of gold saw heightened demand as oil prices caused widespread risk-aversion strategies. The Australian Dollar, which has close ties to gold prices, increased thanks to the gold surge.
‘I’m always reluctant to get overly friendly to the market when it is near its highs, but its resilience is impressive so far this year and one has to respect that,’ Marex Spectron’s David Govett said. ‘There is still good physical demand out of Asia at lower numbers, keeping it supported and it would seem that there is money looking for a home at the beginning of a new year which is happy to invest in precious metals,’ he added.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has fallen to a low today of 0.5404.
Tuesday’s British Consumer Prices Index declined to a record-equalling low, causing the Pound to plummet versus all 16 of its major peers. However, the Pound recovered some of its losses as the decline was unjustified. The Pound is likely to trend lower thanks to easing pressure on The BoE to tighten monetary policy.
‘Inflation is slowing very sharply and the market is rightly anticipating, largely as a result of that, that the prospect of monetary tightening has disappeared over the horizon now,’ said John Wraith, head of UK rates strategy at UBS Group AG in London. ‘It keeps yields declining.’
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Hold Steady
With a lack of data to provoke changes, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold steady in its current position.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high today of 0.5404.
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