The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate softened by around -0.70% during Friday’s European session.
As the US Dollar strengthens, and gold prices decline, the ‘Aussie’ (AUD) softened versus the majority of its most traded currency rivals. Speculation that the Reserve Bank of Australia (RBA) will ease policy again in 2015 is also weighing on demand for the South Pacific asset.
After British economic data showed Construction Output improved, the Pound strengthened versus many of its major peers. Further appreciation can be linked to comments made by Citigroup official Steven Englander who stated that the British currency was ‘very attractive’.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5085.
The recent US Dollar appreciation has weighed on demand for the ‘Aussie’ and its high-yielding qualities. A stronger ‘Buck’ (USD) also pushed gold prices down, which adds more downward pressure on the Oceanic currency. Gold dropped by around -0.75% during Friday’s European session.
Additional ‘Aussie’ losses can be attributed to speculation that the RBA will cut the cash rate once more in 2015 as overvaluation hinders economic recovery and inflows from foreign investment. Nomura Australia rate strategist Andrew Ticehurst has successfully predicted all of the RBA cuts in 2015, and expects another before year-end. ‘The next real window for an RBA cut is likely August, and we currently assign a 40 to 50 per cent probability to a move at this time,’ he says. ‘We think the probability rises again later in the year, and a move by November is more likely than not.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has fallen to a low of 0.5084.
In response to positive British economic data, the Pound strengthened versus the majority of its most traded currency rivals during Friday’s European session. UK Construction Output bettered the median market forecast of 1.1% growth in March, with the actual result gaining by 1.6% on the year. On the month, March’s Construction Output gained by 3.9% on a seasonally-adjusted basis.
Additional Sterling gains can be attributed to comments made by Citigroup official Steven Englander. ‘In our negative- and low-yield world, it is the only major liquid currency with a significant yield other than the Dollar,’ Englander wrote. ‘The surprise Conservative majority in the election removes the political risk of a hung parliament and sharp reversal of policy. Overweighting the Pound gives you Euro diversification with yields that are only a couple of basis points below Dollar yields.’
Given the complete absence of both British and Australian economic data to curb the trend, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold losses for the remainder of Friday’s European session. With that being said, however, should the US Dollar soften from disappointing domestic data the ‘Aussie’ could see a fractional recovery.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5126 today.
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