The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced by around 0.54% on Thursday morning.
After having declined significantly over the past few days, the Pound recovered some of its losses on Thursday morning. This can be attributed to traders fearing the depreciation was overdone. The Sterling uptrend is also as a result of a softer single currency as quantitative easing in the Eurozone takes effect.
The Australian Dollar, meanwhile, softened versus many of its major peers amid dampened market sentiment as crude prices fall. Additional losses can be attributed to the strength of the US Dollar which has seen decreasing demand for high-yielding assets.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9334.
Yesterday…
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened by around -0.33% on Wednesday morning.
The Pound dived versus the majority of its most traded currency rivals on Wednesday as a result of disappointing domestic data. Further declination can be attributed to dovish statements from policymakers in minutes from the most recent Bank of England (BoE) interest rate decision.
In addition to data and minutes hurting demand for the Pound, political uncertainties as we approach the general election are hindering investor confidence.
The Australian Dollar, meanwhile, edged lower versus many of its major competitors as a result of dampened risk sentiment with crude prices falling rapidly. In addition, speculation that the Reserve Bank of Australia (RBA) will be forced to cut the cash rate further has weighed on the ‘Aussie’ (AUD).
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9294.
Pound Sterling (GBP) Exchange Rate Dives on Poor Data
Minutes from the most recent Bank of England (BoE) monetary policy meeting revealed that all policymakers were happy to keep the cash rate unchanged as inflationary pressures cause concern. This dovish outlook caused the Pound to soften versus the majority of its most traded currency rivals.
‘There was a risk that divergent monetary policy trends, as well as stronger prospects for growth in the UK than in the Euro area, might continue to put upward pressure on the Sterling exchange rate,’ the committee said on Wednesday. ‘This had the potential to prolong the period for which inflation would remain below the target and exacerbate the risk that lower expectations of inflation might become more persistent.’
British domestic data was particularly disappointing on Wednesday which aided the Pound’s depreciation. January’s Unemployment Rate came in at 5.7% despite predictions of a drop to 5.6%. Average Weekly Earnings came in at 1.8%, cooling from the previous wage growth of 2.1%. Additionally, Average Weekly Earnings excluding Bonus was forecast to improve from 1.7% to 1.8%, but the actual result only managed to reach 1.6%.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 1.9272 today.
Australian Dollar (AUD) Exchange Rate Edges Lower on Damp Risk Appetite
With crude prices dropping towards $40 a barrel, market sentiment took a shot in the ribs. The cooling risk appetite has caused soft demand for high-yielding assets such as the ‘Aussie’ Dollar.
In addition to dwindling risk sentiment, the ‘Aussie’ also dropped in response to speculation that the RBA will be forced to cut rates in order to devalue the currency despite ongoing concerns regarding a housing bubble. ‘On the basis of the current forecasts for growth and inflation, members were of the view that a case to ease monetary policy further might emerge,’ the RBA said.
‘History shows that the bank uses this language just prior to changing the cash rate,’ ANZ senior economist Felicity Emmett said.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Trend Lower
Given the various factors driving Sterling down, and with a lack of data to curb the trend, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to continue trending lower over the course of the European session.
Thursday may see GBP/AUD volatility cool a little given the distinct absence of influential domestic data pertaining to either nation.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate reached a high of 1.9435 today.
