- UK Pound strengthens despite complete absence of data
- Easing ‘Brexit’ concerns push GBP exchange rates higher
- Australian Dollar struggles against damp market sentiment
- GBP/AUD exchange rate forecast to hold gains
Pound Sterling (GBP) Exchange Rate Forecast to Rally despite Absence of Data
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rallied by around 0.6% on Friday afternoon.
This week the UK Pound strengthened considerably versus many of its major peers, thanks to consolidative trading, amid concerns that GBP depreciation in the aftermath of the announcement of the EU referendum date was overdone.
Also highly supportive of demand for the UK unit was news from the latest opinion polls which showed that the ‘Remain’ EU referendum campaign have taken a commanding lead. Positive sentiment was also fuelled by the visit of US President Barack Obama as the heavyweight political figure urged the UK to stay in the European Union.
Even a slew of less-than-ideal domestic data reports released earlier in the week wasn’t enough to offset Sterling gains. However, the data does suggest that the British economy is on course for a significant slowdown in the first-quarter.
‘The stay-in vote is picking up a little bit,’ said Jennifer Hau, a foreign-exchange strategist at Credit Agricole in London. ‘Although data coming in is important, general market risk sentiment seems to be the key driver for Sterling at the moment.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.8600.
Australian Dollar (AUD) Exchange Rate Forecast to Struggle despite Iron Ore Rally
The Australian Dollar has endured a mixed-faring this week as dampened market sentiment was offset by predictions of Federal Reserve rate hike delays. Also combatting Australia’s losses in response to risk-off trading was rising iron ore prices.
However, the iron ore price rally has not supported the ‘Aussie’ (AUD) today amid expectations that demand will taper off.
‘It feels unlikely that the Chinese steel industry is being disciplined and not restarting capacity,’ said analysts at Liberum, a London-based broking house. ‘Our view for the year remains that demand has been front end loaded, driven by restocking and stimulus speculation, and will taper off.’
Even ongoing concerns of long-term delays to a Federal Reserve benchmark rate increase has not been enough to overshadow dampened market sentiment.
The reduction in risk-appetite can be linked to China’s economic woes as the Shanghai Composite Index ended the week 3.9% down. A significant drop in European and American stocks today also fuelled risk-off trade.
‘There’s still a lot of doubt over the sustainability of the turnaround in the Chinese macro numbers,’ said Adrian Zuercher, head of Asia asset allocation at UBS. ‘It’s a very stimulus-driven rebound that we now see.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 1.8445 during Friday’s European session.
GBP/AUD Exchange Rate Forecast to Hold Gains
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to hold gains into the weekend given the complete absence of economic data to provoke volatility.
There will, however, be a number of ecostats over the coming week with potential to provoke GBP/AUD exchange rate volatility.
For those invested in the ‘Aussie’, Wednesday’s Consumer Prices data will be most likely to cause movement. However, commodities prices and market sentiment will be far more likely to dictate Australian Dollar movement. US Dollar positioning will also be of importance.
For those trading with the British Pound, meanwhile, Wednesday’s 1st quarter Gross Domestic Product data will be highly significant. With that said, however, there is the chance that the UK unit will barely respond to domestic data similarly to this week as traders focus on political developments.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate reached a high of 1.8633 during Friday’s European session.
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