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

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Pounds Sterling (GBP)

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate declined by around -0.14% during Thursday’s European session.

With the situation in Greece weighing heavily on trader risk-appetite, the Australian Dollar softened versus its peers as investors favoured safe-haven assets. With so much resting on Sunday’s Greek referendum, risk-appetite is unlikely to significantly improve until the decision is made. Either way, it doesn’t guarantee a return to high-yield demand given that both a ‘yes’ and a ‘no’ vote is likely to shake up the currency market.

If Greeks vote ‘yes’ to austerity than a government shift is almost certain given that Syriza was elected to end austerity. If they vote ‘no’ there is the potential that the Hellenic nation will be forcibly ejected from the Eurozone.

In addition to damp market sentiment weighing on demand for the ‘Aussie’ (AUD), domestic data failed to impress. May’s Trade Balance saw the deficit narrow less-than-expected, hitting A$ -2751 million instead of the median market forecast A$ -2225 million. ‘It’s worse than what the market was looking for, so we’re seeing a bit of reaction in the Aussie Dollar,’ IG Markets chief strategist Chris Weston said.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.4886.

The Pound Sterling, meanwhile, fluctuated versus its major peers in response to mixed results from domestic data publications. Whilst Nationwide House Prices failed to meet with median market forecast figures on both a monthly and an annual basis, construction output bettered estimates. The Construction PMI was expected to increase from 55.9 to 56.5, but the actual result climbed to 58.1 in June.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI said: ‘UK construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter. Survey respondents cited robust inflows of new work in June, adding to already strong order books across the sector.’

Looking ahead, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is most likely to see movement as a result of market sentiment rather than domestic data publications.

With that being said, Friday’s economic data has the potential to provoke volatility for the Oceanic currency. The Performance of Service Index, Retail Sales and China’s Composite PMI all have the potential to stimulate ‘Aussie’ movement. For those trading with the Pound, Friday’s Services PMI is likely to cause Sterling changes.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the range of 0.4863 to 0.4903 during Thursday’s European session.

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