The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate gained by around 0.30% towards the end of Thursday’s European session.
Although China’s Manufacturing PMI remained in contraction territory, the ‘Aussie’ (AUD) strengthened versus many of its most traded currency rivals.
The appreciation can be linked to rising oil and gold prices, as well as speculation that the Reserve Bank of Australia (RBA) won’t be cutting the benchmark interest rate during the next policy meeting.
The Pound, meanwhile, softened versus the majority of its most traded currency competitors. The depreciation is a result of less-than-ideal retail sales. Additional losses can be linked to ongoing damp investor confidence as we approach the general election.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5167.
National Australia Bank (NAB) stated that the RBA will not cut rates in May, causing the ‘Aussie’ to advance versus many of its most traded currency rivals.
NAB said on Thursday it now expected ‘the board will hold the cash rate steady at 2.25 per cent at the May 5 meeting.’ This was because Wednesday’s inflation data eased pressure on the central bank to loosen policy further.
‘On the economy, recent readings on retail sales, dwelling investment, and business conditions have all improved and have led us to revise up our near-term domestic demand forecast modestly,’ said the NAB chief economist Alan Oster. ‘This is evidence that prior rate cuts are continuing to gain some traction.’
Rising crude and gold prices also aided the ‘Aussie’ uptrend. However, the gains have been somewhat sluggish thanks to dampened market sentiment amid geopolitical tensions in Europe, and wit China’s manufacturing output contracting.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has fallen to a low of 0.5136.
British retail sales data printed poorly on Thursday which caused the Pound to soften versus the majority of its most traded currency rivals. On the month, March’s Retail Sales declined by -0.5% despite expectations of 0.5% growth. Retail Sales including Auto also cooled by -0.5% in March on the month.
‘Overall, disappointing,’ said economist Alan Clarke. ‘It may well be that consumers maxed out before Christmas in a discount-fuelled frenzy and the post-Christmas period is experiencing a pause for breath. The monthly data all point towards sluggish Q1 GDP, not the sort of reading that the coalition government will be hoping for.’
Keith Richardson, managing director for retail at Lloyds Bank Commercial Banking, said: ‘Even with continued falls in fuel and food prices, consumers are responding to this current period of uncertainty by being just as careful about their own spending as they have been for the past few years.’
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Hold Gains
Given the complete lack of domestic data to curb the trend, and with the general election weighing heavily on demand for the British asset, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold gains for the remainder of Thursday’s European session and into the beginning of the Australasian session.
The Australasian session is likely to see quieter AUD/GBP trade, however, with a complete absence of domestic data pertaining to either nation to provoke volatility.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5172.
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