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

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Pounds Sterling (GBP)

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate softened by around -0.46% during Friday’s European session.

After it became apparent that the European Union was preparing for the potential for Greece to default, market sentiment dampened considerably. This saw cooling demand for high-yielding assets such as the Australian Dollar. The depreciation was somewhat slowed, however, thanks to a weaker US Dollar.

After domestic data produced mixed results, the Pound advanced versus many of its peers. Whilst Construction Output declined on a monthly basis in April, the annual figure bettered estimates. The Office for National Statistics (ONS) stated that they implemented a new way of calculating construction prices and costs, which caused previous figures to be upwardly revised. The knock-on effect of higher construction output was upward revisions to Gross Domestic Product throughout 2014 and in the first-quarter of 2015.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.4970.

Australian Dollar (AUD) Exchange Rate Forecast to Decline against the Pound despite US Dollar Weakness

As explained above, geopolitical upheaval in Europe is having a marked effect on trader risk-appetite. As a risk correlated currency, the ‘Aussie’ (AUD) softened in response. Additional losses can be attributed to recent comments made by the Reserve Bank of Australia (RBA) Governor Glenn Stevens who stated that the central bank was prepared to intervene in the market in order to devalue the ‘Aussie’.

Australian economic data printed relatively disappointingly on Friday, although it had minimal impact with trade dominated by risk-aversion strategies. April’s Credit Card Balances dropped fractionally from A$51.2 billion to A$51.1 billion. In addition, April’s Credit Card Purchases dropped from A$25.6 billion to A$22.9 billion.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.4954 during Friday’s European session.

Pound Sterling (GBP) Exchange Rate Forecast to Strengthen against the ‘Aussie’ as ONS Revises Up UK GDP

As mentioned previously, the ONS stated that the implementation of a new method of calculating construction output caused upward revisions to growth in 2014 and the first-quarter of 2015. ‘The second estimate of gross domestic product (GDP) for quarter 1 (Jan to Mar) 2015 published on 28 May 2015 included an estimate of construction which showed a fall in output of 1.1% in quarter 1 (Jan to Mar) 2015.

This estimate has been revised within this release based on the incorporation of late data, new seasonal adjustment parameters and the introduction of an interim solution for deflators. Output is now estimated to have decreased by 0.2%. This upward revision of growth of 0.9% provides an upwards revision of 0.1 percentage points (to 1 decimal place) to the growth rate of GDP,’ stated the ONS.

On the month, Construction Output declined by -0.8% in April despite prediction of a 0.1% increase. On an annual basis, April’s Construction Output advanced by 1.5%; bettering the median market forecast 0.5% growth.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.4996 today.

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