The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate softened by around -0.28% on Thursday afternoon.
With oil prices crashing below $50 a barrel, and with tensions mounting in Libya, trader risk sentiment dampened significantly. As a high-yielding, risk-correlated currency, the Australian Dollar softened in response to trader risk-aversion. A large declination was avoided, however, thanks to a gold price surge as traders flock to safe-haven assets.
The Pound Sterling, meanwhile, strengthened versus the majority of its most traded currency rivals thanks to positive domestic data. Further appreciation can be attributed to speculation that the Bank of England (BoE) will be the first major central banks to lead a rate hike cycle.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5045.
Oil prices resumed declination on Thursday after US supplies increased exponentially. With the Saudi’s looking to ramp up supply in order to maintain their market share, oil prices could cool to fresh 2015 lows.
‘Saudi Arabia’s oil policy has firmly moved to protect its market share,’ Christyan Malek, London-based analyst at Nomura International Plc, said in a report. ‘There is even tail-event risk that the kingdom chooses to increase production to ensure that this is the case, thereby placing a cap on the recovery in medium-term prices.’
Australian data also printed poorly which has aided the ‘Aussie’ (AUD) downtrend. Reserve Bank of Australia (RBA) Foreign Exchange Transactions, Other Transactions and Government Transactions all cooled from previous figures.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.5017 today.
After the Federal Reserve published dovish minutes, in which policymakers showed caution with regards to rate hikes, the Pound strengthened considerably. This is due to traders speculating that the Bank of England (BoE) will be the first major central bank to increase the benchmark interest rate.
Additional gains are as a result of positive data. The Confederation of British Industry (CBI) Trends Selling Prices was forecast to drop from -6 to -7, but the actual result advanced to 8. CBI Trends Total Orders eclipsed the median market forecast of a rise from 4 to 6, with the actual result reaching 10.
‘Our manufacturers have more of a spring in their step this month, regaining some of the momentum lost towards the end of last year,’ said Rain Newton-Smith, economics director at the CBI. ‘The drop in oil prices is good news for the manufacturing sector in the UK, bringing with them lower operating costs, but North Sea producers are clearly suffering.’
With investor risk-aversion strategies dominating trader focus, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold losses for the remainder of Thursday’s trade. There is the potential for heightened Sterling volatility on Friday with several influential data publications due.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5073 today.
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