The Australian Dollar has been in a clear state of decline against peers recently due to the US Dollar strengthening, while the Pound has been making a more varied set of movements owing to Referendum concerns coming alongside supportive national data.
The appeal of the Australian Dollar has been decidedly lacking recently, with losses being widespread and considerable. This represents a sharp reversal compared to earlier movement.
One of the biggest issues for ‘Aussie’ investors has been the limited availability of domestic data, which has in turn allowed news from the US to have a deciding say over how the national currency fares.
Most recently, claims in the US over the end of March and beginning of May have fallen; this news has bolstered the ‘Buck’ and conversely seen the appeal of the ‘Aussie’ dwindle.
Elsewhere, the Australian Labor Party (ALP) has unveiled its 10-year economic plan, which has alternately been dismissed by rival MPs and praised by commentators for its frank admission that the late 2000’s financial crash is continuing to harm the Australian economy.
The Pound has been harmed of late by an escalation of the stakes for the EU Referendum, although this is not likely to be an isolated incident, given how close the June 23rd vote date is now.
These latest warnings as to what could happen if the UK leaves the EU have come from two sources – billionaire investor George Soros and the National Institute of Economic and Social Research (NIESR).
In the former case, Soros has offered an alarming analysis of what might happen if ‘Brexit’ occurs, stating:
‘If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable’.
The NIESR’s slightly less-apocalyptic prediction has been that if the UK left the EU, those on lower incomes might lose over -£5500 each year in tax credits and benefit payments, leading up to 2020.
Sterling did receive good news in the form of a reduction in the trade deficit yesterday, although this did little to counteract the overwhelming sense of alarm that was prevalent among investors.
With a considerable gap present before the next Australian economic data is released, it will be up to UK and US ecostats to hold influence in the AUD/GBP pairing.
First off will be the UK’s construction output results for April, which are due to be released this evening and currently have a rise on the month and fall on the year predicted.
Following on from this in the weekend will be the US University of Michigan confidence score for June, which is forecast to dip slightly. Such an outcome would likely benefit the ‘Aussie’, due to the fact that falling confidence would reduce the likelihood of an early Fed interest rate hike.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate has been trending in the region of 0.5132 and the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been trending in the region of 1.9492 today.
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