The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate strengthened by around 0.23% during Monday’s European session.
Despite the fact that trader risk-sentiment dampened considerably amid geopolitical tensions in Europe, the ‘Aussie’ (AUD) edged higher versus many of its most traded currency rivals. This can be attributed to stimulus measures employed by the People’s bank of China (PBOC) as they look to combat a recent run of disappointing data results.
The Pound, meanwhile, softened versus most of its major peers amid concern that upheaval in Europe will weigh on the British economy. Additional declination is as a result of trader reluctance to invest ahead of the general election for fear of a dramatic policy overhaul.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5215.
With tensions between Greece and Eurozone officials reaching breaking point, trader risk-appetite cooled significantly. This has impacted on demand for the South Pacific asset and its high-yielding qualities. However, the ‘Aussie’ still managed to gain versus many of its major peers; albeit only fractionally.
The ‘Aussie’ gains can be attributed to the PBOC opting to stimulate their economy after recent domestic data publications printed poorly. Australia benefits from this because a softer Yuan is better for trade.
Mark Williams, chief Asia economist at Capital Economics, stated; ‘The decision is a response to the weakness of recent economic data. Most of the activity and spending data for March came in below consensus. Further reserve-requirement ratio (RRR) cuts are likely – perhaps another 150 basis points before the end of the year – along with at least one more cut to benchmark interest rates.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.5208.
British housing data produced mixed results which caused the Pound to soften versus most of its major rivals. On the month, April’s Rightmove House Prices advanced by 1.6%; eclipsing March’s figure of 1.0%. On the year, Rightmove House Prices advanced by 4.7% in April; down from the previous figure of 5.4%.
‘In spite of the distractions and uncertainty surrounding the upcoming election, demand for the right roof over your head seems unchecked,’ said Miles Shipside, director at Rightmove. For some, their ‘personal housing agenda is perhaps higher than the bigger-picture political one.’
The Pound also softened in response to political uncertainty as the general election approaches. With some describing the forthcoming election as the most closely contested in modern political history, fears of a complete policy overhaul has stymied investor confidence.
Although there is a complete absence of domestic data to curb the trend, and with political uncertainties weighing on the British asset, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has the potential to fluctuate during Monday’s European session. The fluctuation will be as a result of trader risk appetite, or lack thereof, with geopolitical tensions in Europe no closer to resolution.
Tuesday ought to see heightened AUD/GBP volatility with the Reserve Bank of Australia (RBA) due to publish minutes from their most recent policy meeting .An absence of British data should see the Pound subject to geopolitical developments.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.5232.
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