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Pound Australian Dollar Sinks as Positive Risk Appetite Boosts ‘Aussie’

July 7, 2021 - Written by John Cameron

GBP/AUD Exchange Rate Falls, Risk-On Mood Buoys Australian Dollar

The Pound Australian Dollar exchange rate fell today as an increase in risk appetite has boosted demand for the risk-sensitive ‘Aussie’. The pairing is currently fluctuating around AU$1.83.

Risk sentiment has improved as key economies including the European Union, the United States and China recover from the coronavirus pandemic. Consequently, this has buoyed demand for risk-sensitive currencies like the Australian Dollar.

Australia’s Covid-19 situation has left some Australian Dollar traders cautious, however, with Sydney – Australia’s largest city – facing an extended lockdown to contain the latest virus outbreak.

Premier of New South Wales, Gladys Berejiklian, commented:

‘What we want to do is give us our best chance of making sure this is the only lockdown we have until the vast majority of our citizens are vaccinated.

‘We don't want to be in a situation where we are constantly having to move between lockdown and no lockdown.’

Today saw the release of the latest ANZ job advertisements data for May, which rose from April’s 4.7% to 7.9%.

As a result, the outlook for Australia’s employment sector continues to improve, buoying confidence in the nation’s economic recovery for 2021 and beyond.

Pound Exchange Rate Dips as UK House Prices Fall for the First Time Since January

The Pound (GBP) fell today after UK house prices dropped 0.5% in June from May in its first fall since January, according to the mortgage lender Halifax.

Russell Galley, managing director at Halifax, commented on the report:

‘Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market. Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms. At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.’

GBP investors are also cautious about the threat of rising Covid-19 infections, with the latest data predicting two-million summer cases of the virus.

In absence of any notable UK economic data today, Pound investors are instead focusing on Covid-19 developments.

Concerns over rising cases of coronavirus has dampened confidence in the UK economy. Any further possibility of lockdowns in autumn or winter would limit the nation’s economic recovery.

GBP/AUD Exchange Rate Forecast: RBA Speech in Focus

Australian Dollar (AUD) investors will be looking ahead to tomorrow’s speech from the Reserve Bank of Australia’s Governor Philip Lowe.

Any dovish comments about the outlook for Australia’s economy would drag down the AUD/GBP exchange rate.

However, improving risk sentiment would see demand for the ‘Aussie’ increase.

Pound (GBP) traders are looking ahead to Friday’s release of the latest UK industrial, manufacturing, and GDP data for May.

Could an improving outlook for the UK economy see Sterling claw back some of its losses?

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