The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate edged higher by around 0.21% on Thursday.
After the Pound’s election rally was halted by a dovish Inflation Report from the Bank of England (BoE), the British asset resumed bullish trade on Thursday thanks to advancing house prices. The Pound has also found support from Wednesday’s positive labour market data as the Inflation Report somewhat overshadowed the positive results.
The Australian Dollar, meanwhile, softened versus most of its major peers despite the weak US Dollar. The downtrend can be linked to fears of ‘Aussie’ (AUD) overvaluation after a significant rally during the Australasian session.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9440.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen Versus the US Dollar Amid Positive Sentiment Towards the Tories
After the Conservative victory in the general election, the Pound rallied as traders felt that a Tory government would be best for banks and businesses. Even the prospect of an earlier-than-expected referendum on Britain’s membership in the European Union wasn’t enough to rock sentiment.
Thursday has seen the Pound continue to gain versus the majority of its most traded currency rivals after RICS House Price Balance printed positively. Eclipsing the median market forecast of 22%, British house prices advanced by 33% in April as fewer homes were sold in the run-up to the general election. The positive result has been seen as problematic by some, however, as the rising cost of housing could see fewer new homes built. This will make the Tories pledge to build 1 million new homes by 2020 particularly difficult.
‘The affordability and availability of homes in the UK is now a national emergency and addressing this crisis must be the priority for the new government,’ RICS’s head of policy, Jeremy Blackburn, said. ‘Demand-side measures … will not see the Conservatives deliver on their promise of 1 million homes by 2020,’ he added.
Australian Dollar (AUD) Exchange Rate Forecast to Soften Versus the Euro despite Rising Gold Prices
Ordinarily, a weaker US Dollar would stoke demand for the Oceanic currency, which was certainly the case during Thursday’s Australasian session. However, the Reserve Bank of Australia (RBA) has repeatedly expressed concerns regarding unjustified ‘Aussie’ overvaluation. This has seen some of the gains pared back despite continued US Dollar weakness and rising gold prices.
The higher gold prices are also the result of US Dollar weakness. This has softened the ‘Aussie’ declination to an extent. ‘A close above technical resistance at $US1,215 could help gold exiting the narrow trading range between $US1,175 and $US1,225 the metal has been confined over the past ten weeks,’ ActivTrades chief analyst Carlo Alberto de Casa said. ‘The US Dollar’s weakening has been instrumental to the latest move higher and of course the view that the Fed is less likely to raise interest rates next month after weak economic data.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Hold Gains despite Bearish US Dollar
With an absence of domestic data pertaining to either nation to provoke changes, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to hold gains for the remainder of the European session. This will be well received by the RBA.
Friday will see GBP/AUD exchange rate volatility dominated by market sentiment and commodity prices with a complete absence of both British and Australian economic data to be published.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 1.9543 today.
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