Sterling made moderate gains against the Australian Dollar on Tuesday, marking the first actual gains seen by the Pound against its peers since the UK voted to leave the EU at the end of last week.
The Australian Dollar has been mixed of late, although a sudden bout of weakness for the US Dollar meant losses have been tempered in some pairings.
The GBP/AUD exchange rate remains in the region of a multi-year low, having dropped to 1.7981 from 1.9707.
Pound Sterling Gains Despite Credit Rating Warnings
While the Pound has recovered slightly after a dismal immediate post-Brexit performance, the currency remains in the region of multi-year lows against a number of its most-traded counterparts.
This relief rally is thought to be partly due to excessive profit taking among previously more popular peers, particularly the US Dollar and the Japanese Yen.
In terms of actual domestic news, little good has been coming out of the UK. The leadership of the UK’s two main political parties remains in serious doubt, while in a triple blow to investor confidence, ratings agencies Standard & Poor’s and Fitch have both cut their perceptions of the UK’s credit rating.
This comes after Moody’s cut its outlook for the country to negative after the ‘Brexit’ vote was announced.
Australian Dollar on the Up as Confidence Hit is Ignored
The Australian Dollar has found itself in relatively high demand today, which comes in sharp contrast to previous days when interest in AUD was comparatively more muted.
One factor raising the appeal of the ‘Aussie’ considerably has been the fact that due to gross profit-taking on the US Dollar and the Japanese Yen, both these rivals have found themselves in negative states recently, thereby bumping up the value of riskier options like the Australian Dollar.
An additional source of support for the Australian currency has been the recent ANZ Roy Morgan weekly consumer confidence index for June; although a dip was recorded from 118.8 to 116.8, the latter figure remains close to a monthly high.
GBP/AUD Exchange Rate Forecast
For the remainder of the current week, Pound Sterling/Australian Dollar exchange rate movement is more likely to occur as a result of the latest ‘Brexit’ news rather than in response to tomorrow’s UK lending and credit data, Thursday’s UK Gfk confidence figure and GDP results and Friday’s speech from Bank of England (BoE) policymaker Andy Haldane.
From Australia, tomorrow morning will bring the HIA new home sales result for May, while the week will close for Australia with the AIG manufacturing index for June.
In terms of the UK printings, BoE consumer credit is forecast to rise, mortgage approvals are expected to fall, and confidence and GDP both have a drop-off on the cards.
For Australia, home sales are forecast to jump while manufacturing also has an improvement in store.