The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dived by around -0.85% during the European session.
With market sentiment significantly dampened amid tanking crude prices and geopolitical tensions in Europe, the risk-correlated ‘Aussie’ (AUD) softened versus the majority of its most traded currency competitors. Additional losses can be attributed to speculation that the Reserve Bank of Australia (RBA) will be forced to cut rates thanks to ‘Aussie’ overvaluation weighing on economic growth.
The Pound, meanwhile, is generally ticking lower versus most of its major peers. This is mainly as a result of political uncertainties weighing on investor confidence as we draw nearer to the general election. The depreciation has been minimal, however, thanks to positive sentiment towards the Bank of England (BoE) after Governor Mark Carney dismissed dovish comments from Chief Economist Andrew Haldane, who stated that rate revisions could go either way in the current climate of low inflation.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5161.
As explained above, low crude prices and tensions between Greece and European creditors have seen trader risk appetite dwindle significantly. As a risk-correlated currency, the Australian Dollar softened from lack of demand.
Aiding the ‘Aussie’ downtrend is growing speculation that the RBA will be forced to cut rates as a massively overvalued Australian Dollar is having a detrimental effect on economic growth. Even the house-price bubble isn’t enough to deter speculation of a post-Easter easing cycle.
‘Localized speculative elements in the housing market have been apparent for some time now,’ Felicity Emmett, a senior economist wrote. ‘Given that they didn’t stand in the way of the RBA kicking off a fresh easing cycle in February, we expect that will continue to be the case.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has fallen to a low of 0.5153 today.
The forthcoming general election is promoting a sense of political uncertainty which is weighing on investor confidence. With opinion polls showing no clear majority for either major party, the potential for a hung parliament is stirring up concerns of significant policy reformation.
British economic data produced a mixed-bag of results, but it has had minimal impact on the Pound amid political upheaval. Net Consumer Credit hit 0.7 billion in February, missing the market consensus of a rise from 0.8 to 0.9 billion. February’s Net Lending Securities on Dwellings bettered the median market forecast of 1.6 billion, with the actual result reaching 1.7 billion. Mortgage Approvals also improved upon estimates of 61,500 with the actual result coming in at 61,800.
Given the lack of domestic data to provoke changes for the remainder of the European session, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold losses. This is likely to be compounded by continued declination in crude prices.
The Australasian session ought to see heightened AUD/GBP volatility with several Australian economic data publications due for release.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5209 today.
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