Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Edge Higher despite US Dollar Strength

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Pound Sterling (GBP)

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate edged higher by around 0.25% during Tuesday’s European session.

Despite the fact that US Dollar bullishness has seen dampened demand for high-yielding assets, the Australian Dollar strengthened versus its British counterpart. The ‘Aussie’ (AUD) is generally trending lower versus most of its major peers, however, after Reserve Bank of Australia (RBA) minutes showed that policymakers were willing to intervene in the market in order to devalue the currency.

The Pound, meanwhile, softened versus most of its major rivals after consumer prices showed the UK dipped into deflation. The losses have been slowed, however, considering most analysts were expecting the move into negative inflation. Additionally, the Bank of England (BoE) has not showed any concern over the cool consumer prices.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5115.

Australian Dollar (AUD) Exchange Rate Forecast to Strengthen Versus the Euro despite Soft Data

With European economic data printing poorly, and with geopolitical tensions in Greece dominating trader focus, the Australian Dollar advanced versus the shared currency.

However, against most of its major peers the ‘Aussie’ softened thanks to RBA minutes which stated that policymakers were willing to ease policy further in order to combat the overvalued Oceanic currency. Ben Jarman, an economist at JPMorgan, said; ‘We expect the RBA to stay on hold, though as today’s communications make clear, if the real economy underperforms, housing market exuberance will not [at this stage] hold back the board from cutting again.’

Aiding ‘Aussie’ losses was March’s Conference Board Leading Index, a composite index used to forecast short to mid-term growth in the Australian economy, which softened by -0.1%.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.5147.

Pound Sterling (GBP) Exchange Rate Forecast to Soften Versus the US Dollar on Disappointing Data

In response to less-than-ideal British economic data, the Pound softened versus the US Dollar.

April’s Consumer Price Index dropped to -0.1% on the year, the first time UK inflation has fallen into negative territory since 1960. Additionally the Core CPI measure failed to meet with the median market forecast of 1.0%, with April’s result dropping to 0.8%.

‘We expect inflation to be very low over the next few months. But over the course of the year, as we get towards the end, inflation should start to pick up towards our 2 percent target,’ BoE Governor Mark Carney told broadcasters.

‘We suspect today’s numbers will not significantly change the shape of the UK policy debate with the position remaining that the next move in UK interest rates is most likely to be up, rather than down,’ Investec economist Philip Shaw said.

Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast to Hold Gains

Given the lack of further domestic data to influence changes, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold gains for the remainder of Tuesday’s European session. Wednesday’s Australasian session is likely to see heightened AUD/GBP volatility with BOE Minutes and Australian Consumer Confidence data due for publication.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5147.

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