Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Dive on Damp Market Sentiment

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Pound Sterling (GBP)

During Friday’s European session, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate softened by around -0.55%.

As the US Dollar strengthens, and with geopolitical tensions in European reaching boiling point, the Australian Dollar dived during Friday’s European session amid dampened market sentiment. The Pound, meanwhile, strengthened against most of its peers after government borrowing declined.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.4881.

Australian Dollar (AUD) Exchange Rate Forecast to Dive against the Pound on Trader Risk-Aversion

As explained above, the combination of US Dollar strength and geopolitical upheaval in Europe has seen trader risk-appetite cool significantly. As a risk-correlated currency, the ‘Aussie’ (AUD) declined in response. Relatively disappointing results from domestic data also weighed on ‘Aussie’ gains.

The Australian Dollar downtrend was somewhat slowed, however, thanks to gold prices rising to a fresh two-week high. Bullion benefited as ‘investors likely flocked to safe-haven assets on concerns over increased risk of a Grexit following the failed talks, amid a more dovish Fed dot-plot chart’, said analysts at OCBC Bank, referring to the Greek debt crisis.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.4873 during Friday’s European session.

Pound Sterling (GBP) Exchange Rate Forecast to Advance against the ‘Aussie’ after Public Sector Borrowing Declined

The Pound advanced versus most of its peers of late in response to a succession of positive ecostats. Of particular note was accelerated wage growth and inflation moving away from deflationary territory. This combination has led many futures traders to bring forward bets as to the timing of a Bank of England (BoE) interest rate increase.

Friday has seen the British asset continue to trend higher versus many of its rivals after data showed that government borrowing dropped in May.

‘In May 2015, public sector net borrowing excluding public sector banks (PSNB ex) was £10.1 billion; a decrease of £2.2 billion, or 18.0% compared with May 2014. This decrease in net borrowing was largely due to a decrease of £1.6 billion in central government net borrowing, combined with a decrease of £0.6 billion in local government net borrowing. Central government receipts in May 2015 were £45.0 billion, an increase of £1.8 billion, or 4.1% compared with May 2014,’ stated the Office for National Statistics (ONS).

Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Hold Losses on Lack of Data

Given the absence of further domestic data publications to provoke changes, 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, the ‘Aussie’ could strengthen if the US Dollar resumes bearishness.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.4911 during Friday’s European session.

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