Diminishing worries over the likelihood of a ‘Brexit’ helped to bolster the pound to Aus dollar exchange rate at the start of the week, while speculation over central bank policy continued to weigh on the Australian Dollar.
While Australian Private Capital Expenditure for the first quarter proved decidedly weaker than forecast this was not enough to put the Australian Dollar exchange rates (AUD) on a weaker footing.
Confidence in the pound sterling (GBP), meanwhile, was diminished by an unexpected downward revision of the UK’s first quarter GDP from 2.1% to 2.0%.
First quarter Australian construction demand failed to improve as far as forecast, depriving the Australian dollar exchange rates of an opportunity to rally.
Investors continued to pile into the Pound (GBP), meanwhile, as the Institute of Fiscal Studies (IFS) published its assessment of the potential negative impact that a ‘Brexit’ could have on the UK economy.
Despite the CBI Reported Sales Index not printing as strongly as forecast the pound to Australian dollar exchange rate continued to extend its bullish gains on Tuesday.
Gains for the GBP/AUD rate are largely a symptom of earlier EU Referendum polling, which has had a sustained positive impact on the Poundthe Australian Dollar (AUD).
Markets remained generally dismissive of the chances of a June interest rate hike from the Fed, particularly as the latest US data proved weaker-than-expected, helping to improve the appeal of higher-yielding assets such as the ‘Aussie’.
However, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate soon returned to an uptrend, as investors were encouraged by the latest ‘Brexit’ opinion poll.
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Aussie Dollar (AUD) Exchange Rates Dented by Dovish RBA Comments
The appeal of the Australian Dollar was generally diminished by comments from Reserve Bank of Australia (RBA) Governor Glenn Stevens on Tuesday, with the policymaker failing to adopt a hawkish enough tone to discourage talk of further interest rate cuts to come.
As investors generally assessed Stevens’ words as leaving the door open for further monetary loosening in the near future the antipodean currency softened sharply, although researchers at ANZ noted that:
‘Overall, we think that today’s comments suggest that the Bank will continue to respond to inflation, but will not slavishly cut rates in response to further disappointment on the inflation front. With growth looking okay, we continue to look for another 25bp cut at the August meeting with the Bank on hold following that.’
With risk appetite largely on the decline thanks to continued speculation over the monetary policy outlook of the Fed there seemed little particular reason to favour the Australian Dollar on Tuesday morning.
GBP/AUD Exchange Rate Bullish on Opinion Poll Optimism
Demand for the Pound (GBP), meanwhile, jumped in response to the latest ‘Brexit’ opinion poll placing the ‘Remain’ campaign thirteen points ahead of ‘Leave’.
This prompted a strong surge in market optimism, in spite of the fact that the UK had missed its borrowing target for the 2015-2016 fiscal year more widely than anticipated.
Developments pertaining to the upcoming EU membership referendum remain the primary influence on Pound Sterling, with the seemingly lowered chances of a vote to leave overshadowing less positive domestic data.
Pound Sterling (GBP) Exchange Rates Continued to Trend Higher on BoE Commentary
Commentary from Bank of England (BoE) Governor Mark Carney failed to add downside pressure to the GBP/AUD exchange rate, which extended its bullish run through the morning.
Speaking to the Treasury Select Committee on the subject of the BoE’s latest Quarterly Inflation Report, Carney noted that the Monetary Policy Committee (MPC) and Financial Policy Committee (FPC) were unanimous in their view of the potential negative impacts that a ‘Brexit’ could have on the domestic economy.
As investors are likely to view this as further support for the ‘Remain’ camp the Pound is expected to maintain an uptrend for the time being, although it is likely to another round of profit taking could soon ensue due to persistent uncertainty.
Today finds the pound to pound spot exchange rate priced at 1.
The pound conversion rate (against us dollar) is quoted at 1.242 USD/GBP.
The pound conversion rate (against new zealand dollar) is quoted at 2.113 NZD/GBP.