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Pound Sterling Tracks Higher vs USD & AUD on Policymakers? Comments

April 19, 2016 - Written by Toni Johnson

Dovish Dudley Comments Weigh on US Dollar Demand



Federal Reserve Bank of New York President William Dudley’s comments yesterday afternoon have supressed support for the US Dollar (currency : USD) during today’s session. The US policymaker noted in a speech that the US Federal Reserve’s,

‘monetary policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated.’

The suggestion that the world’s premier economy may be heading for a period of turbulence caused investors to move against the Buck, seeing the Pound Sterling US Dollar exchange rate surge back above the 1.4000 GBP USD threshold – the pair had started out the day in the lower part of the 1.4200s.

Futures markets now factor-in an 83% likelihood that the US Federal Reserve will maintain its benchmark lending rate at its current level of 0.50% at its June meeting. A surprise increase at this policy get-together would therefore trigger strong support for the Greenback.

Australia's political Uncertainty Caused Reduced Demand for the 'Aussie'



Elsewhere, the Australian Dollar (currency : AUD) has experienced volatile trading today following political developments Down Under. Australian Prime Minister Malcolm Turnbull has pre-announced overnight that he is set to call a snap double General Election; he told the media yesterday that,

'my intention is after the budget, at an appropriate time after the budget has been delivered, I will be asking the Governor-General to dissolve both houses of the Parliament for an election which I expect to be held on the 2nd of July.'

The Pound Aussie exchange rate began the session close to its intraday low of 1.8352 GBP AUD before climbing to close to the 1.8500 threshold. However, analysts forecast that with the UK European Union In / Out Referendum still over two months away, and with global commodities prices continuing to improve, the short-to medium outlook for the Sterling Aussie exchange rate remains neutral to negative.



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