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GBP AUD Exchange Rate Rebounds from Intraday Lows but Brexit Fears Recede

Australian Dollar Currency Forecast
  • Pound Exchange Rate Forecast to Tick Higher – Traders remain confident the UK will vote against a Brexit
  • GBP AUD Exchange Rate Dives – AUD exchange rates cool from intraday highs, however, as traders take profits
  • EU Referendum Voting Gets Underway – Statistics reveal a record-high number of registered voters
  • Bookmakers Give High Odds of a ‘Remain’ Victory – Many bookies reveal a higher percentage of bets for ‘Remain’

On EU referendum polling day the GBP AUD exchange rate has seen significant fluctuations despite ongoing risk-on trade, amid confidence the UK will vote to remain a member of the European Union.

The volatility of the pairing is less about GBP AUD currency news, or even EU referendum developments, but rather in reaction to traders taking profits after the ‘Aussie’ (AUD) sustained a marked uptrend since the beginning of the week.

GBP AUD Currency News: EU Referendum Opinion Polls Predict a Close Vote, Bookies Back ‘Remain’

Against the majority of its peers, Sterling began the day trending comparatively flatly and implied volatility had dropped well off from the record-high levels seen a few weeks ago.

This reflects growing trader confidence that the UK will vote to remain a member of the EU, despite several opinion polls indicating that the vote will be too close to call.

Part of the reason traders have become increasingly confident is bookmaker odds which have almost unanimously favoured a ‘Remain’ victory.

Additionally, several bookies have stated that most EU referendum bets have been made for ‘Remain’.

‘The majority of bets today are for Remain, which has seen the odds on Britain staying in the EU shortening from 1/4 to 1/7, and Leave out to 4/1, from 11/4,’ stated a spokesperson for Coral.

The spokesperson also noted that the majority of ‘Remain’ bets have come from online customers, whilst most ‘Leave’ bets have been made in store.

‘This reflects an older customer base who bet in shops wanting out, and the younger customers who bet online are for staying.’

Will GBP AUD Exchange Rates Hold Losses? Australian Dollar Continues to Strengthen ahead of the EU Referendum Vote

The outcome of the UK’s EU referendum will have a marked impact on the GBP AUD exchange rate.

Should the UK vote to remain in the EU, the Australian Dollar may continue to hold gains against the Pound as traders flock to high-yielding assets. What’s more, investors have largely priced-in a vote to ‘Remain’ which means the Pound will not advance significantly.

Today has seen the Australian Dollar cool from intraday highs thanks to trader profit-taking, although the ‘Aussie’ still remains 0.7% ahead of the Pound. That means the ‘Aussie’ is very likely to appreciate further if the UK votes to stay in the EU.

If the UK votes to leave the EU, however, the GBP AUD exchange rate will see significant volatility. It is still likely that the GBP AUD exchange rate will decline given that a Brexit will hit the Pound hardest initially, but reduced demand for high-yielding assets could see the ‘Aussie’ depreciate massively in the longer-term.

This will be a welcome outcome from the perspective of Reserve Bank of Australia (RBA) policymakers, who have openly cited AUD overvaluation as a serious concern.

Given reduced odds of a Federal Reserve interest rate hike in the near-term, and with the RBA on an easing bias, overvaluation is very likely to prompt policymakers into cutting the overnight cash rate further.

GBP AUD Exchange Rate Forecast: All Eyes on the Brexit Vote

With all eyes looking ahead to the UK’s EU referendum vote, forecasting GBP AUD exchange rate movement is very dependent on the outcome.

A complete absence of domestic data also clouds GBP AUD outlook, although ecostats will have had a reduced impact anyway.

A ‘Remain’ victory will be unlikely to be met with significant market volatility although safe-haven assets will most likely see reduced demand.

A ‘Leave’ victory, however, will be met with serious market volatility and high-yielding assets will decline massively.

On EU referendum polling day, the GBP AUD exchange rate was trending within the range of 1.9462 to 1.9712.