The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced by around 0.40% on Friday morning.
With traders fearing that the Pound’s declination on Thursday, following disappointing retail sales data, was overdone; the British asset appreciated on Friday. Additional gains can be linked to speculation that the Bank of England (BoE) will look to hike rates after the general election concludes.
The Australian Dollar, meanwhile, edged higher versus most of its major peers thanks to rising gold and iron ore prices. With expectation that the situation in Greece will be closer to a resolution after the Eurogroup meeting in Riga concludes, improved market sentiment has seen heightened demand for the high-yielding ‘Aussie’ (AUD).
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9434.
Pound Sterling (GBP) Exchange Rate Advances on Overdone Declination
Although Thursday’s retail sales data printed disappointingly, the resultant depreciation was seen as overdone. The slide was oiled by ongoing political uncertainties as we draw ever closer to the general election. Fears of a complete policy overhaul has dampened investor confidence considerably, especially given that opinion polls are giving no indication of a majority lead for any party.
In addition to fears of unjustified losses, the Pound strengthened as a result of improved sentiment towards the BoE. The most recent minutes publication from the last Monetary Policy Committee (MPC) meeting contained hawkish tones, not least with a hint that the bank’s next move will be to increase the cash rate.
‘The only way is up for interest rates, but not yet. The tone from the MPC seems to be taking baby steps in the hawkish direction,’ said Alan Clarke, head of European fixed income strategy at Scotiabank.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 1.9313 today.
Australian Dollar (AUD) Exchange Rate Trending Higher on Market Sentiment
Amid speculation that the Eurogroup meeting in Riga will see better advances in talks between Greek officials and Eurozone officials, trader risk-appetite improved slightly. A softer US Dollar also aided demand for high-yielding assets. As a risk-correlated currency, the ‘Aussie’ gained from improved market sentiment.
Also aiding the South Pacific asset uptrend is the third successive week of iron ore price gains. The rising prices can be linked to BHP Billiton curbing expansion plans. ‘Prices have rebounded as falling Chinese domestic iron ore supply increases steel mill reliance on Australian and Brazilian iron ore,’ ANZ said in a note on Friday. The report cited a ‘turnaround in sentiment toward iron ore’ a day after the bank said a floor may be forming as large, low-cost miners rethink investments.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Fluctuate
With the Eurogroup meeting yet to conclude, and with political uncertainty still weighing on Sterling investment, the Pound to Australian Dollar (GBP/AUD) exchange rate has the potential to fluctuate over the remainder of Friday’s European session. With that being said, the GBP/AUD pairing is likely to hold gains given the absence of domestic data to curb the trend.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 1.9450 today.
