The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dived by around -1.31% in the early stages of Wednesday’s European session.
Although the US Dollar is trending in a relatively weak position, as traders await the Federal Open Market Committee (FOMC) decision, the Australian Dollar softened versus most of its peers. The depreciation is likely the result of dampened market sentiment as the geopolitical upheaval in Europe weighs on trader risk-appetite.
The Pound, meanwhile, rallied after domestic labour market data produced positive results. In accordance with Minutes from the most recent policy meeting, the Bank of England (BoE) sees the potential drag from low inflation fading as the headwind from low wages eases.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.4885 during Wednesday’s European session.
The ‘Aussie’ (AUD) has been generally trending in a weak position after Minutes from the Reserve Bank of Australia (RBA) June policy meeting showed policymakers were willing to intervene in the market in order to devalue the Oceanic currency.
‘Aussie’ overvaluation has been a real drag on economic growth, with businesses finding exporting difficult. Cutting the cash rate could prove to be problematic for the central bank, however, with Sydney house prices continuing to rise.
Wednesday has seen the South Pacific currency continue to trend lower versus its major rivals despite the fact that the US Dollar is trending in a soft position. The depreciation can be attributed to the ever-more-likely event of a Greek exit from the Eurozone with the relationship between Greece and Eurozone officials worsening.
Greek Prime Minister Alexis Tsipras has accused the International Monetary Fund (IMF), to whom Greece owes a great deal of money, of being criminals who ask for impossible measures. The likelihood that the Hellenic nation will default on the next IMF payment due has increased significantly.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.4878 during Wednesday’s European session.
The Pound rallied versus its major competitors after domestic data produced positive results. Average Weekly Earnings excluding Bonuses rose by 2.7% in April on the year, eclipsing the median market forecast 2.5% increase. This is the strongest wage growth since February 2009.
The Office for National Statistics (ONS) said; ‘higher three month average growth rates were recorded, for both regular pay and total pay, across a wide range of industries in the private sector compared with January to March 2015.’
In addition, Claimant Count and Jobless Claims Change both bettered median market forecast figures. Employment Change didn’t quite meet with expectations in April, but April’s Unemployment Rate met with the market consensus and held at 5.5%.
Employment Minister Priti Patel said: ‘Today’s figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before.’ The employment rate for women hit a record 68.6%.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Hold Losses on Damp Market Sentiment
Given the absence of further domestic data publications to provoke changes, and with market sentiment damp amid geopolitical upheaval in Europe, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold losses for the remainder of Wednesday’s European session. Thursday could see heightened AUD/GBP volatility with British Retail Sales data due for publication.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.4953 during Wednesday’s European session.
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