Update 2: GBP/AUD Plummets, Pound Falls for Six Consecutive Days
Sterling sank to a one-month low versus the Australian Dollar (GBP/AUD) over the weekend.
The British currency has now fallen for six consecutive days of trading since striking a 17-month high earlier in December.
Update 1: Pound Sterling Exchange Rates Broadly Soften as Brexit Trade Talks Pushed Back to March
The Pound to Australian Dollar exchange rate fell by 0.75% as Sterling broadly softened in response to the news that PM Theresa May has accepted the EU’s plan to delay Brexit trade talks until March.
According to The Independent; ‘Speaking to European national leaders over dinner at a summit in Brussels on Thursday night the PM accepted that “priority” should be given to talks on the transition period rather than the trade framework.’
EU Council President Donald Tusk also asserted that achieving a Brexit deal by the March 2019 deadline will be ‘dramatically difficult’.
GBP/AUD Exchange Rate Extends Bad Week as Risk Appetite Rises
The Pound to Australian Dollar (GBP/AUD) exchange rate has spend most of the week declining as the ‘Aussie’ was boosted by greater risk appetite strong Australian job market stats.
The interbank GBP AUD exchange rate began the week at 1.78 but has since fallen to 1.7466.
Pound Sterling Exchange Rates Limp with Brexit Negotiations Taking Centre Stage
The Pound has been unable to hold its ground against a stronger Australian Dollar this week, despite some better-than-expected UK ecostats.
Inflation, wage growth and retail sales results all beat expectations.
The most notable result was Thursday’s retail sales report for November, which came in well above expectations due to an unexpectedly successful Black Friday.
Retail sales were forecast to come in at 0.4% month-on-month and 0.3% year-on-year, but they came in at 1.1% and 1.6% respectively, indicating that the Black Friday shopping event had been a bigger-than-expected success for online retailers.
Thursday’s Bank of England (BoE) policy decision disappointed investors however and indicated that the bank was not encouraged by the latest UK ecostats.
The bank left monetary policy frozen, as expected, and continued to indicate that interest rates would only rise at a gradual pace over the next few years.
At the end of the week Brexit negotiations took focus again amid the anticipated EU summit.
As EU leaders appeared to agree that the second phase of Brexit talks would soon begin, the Pound briefly advanced.
However, news that UK-EU trade talks would likely not begin until March caused Sterling to shed some of its gains.
Australian Dollar Rallies on Australian Job Market Strength
Thursday’s Australian job market data continued to make the Australian Dollar (AUD) an appealing buy compared to its rivals on Friday.
November’s Australian participation rate unexpectedly jumped to 65.5% while the unemployment rate remained at 5.4%. The employment change figure jumped to an impressive 61.6k.
Analysts said that overall, Australia’s job market had performed very impressively throughout 2017 and was likely to continue to see decent improvement in early 2018 too.
There are hopes that if Australian employment continues to improve, wage price growth will eventually rise.
On top of the strong jobs data, the Australian Dollar was also bolstered by higher demand for risky currencies, as the Federal Reserve’s latest policy decision left the US Dollar (USD) relatively unappealing.
GBP/AUD Exchange Rate Forecast: Brexit To Dictate Demand for Sterling
With most recent UK data doing little to change Britain’s cloudy economic outlook, Pound Sterling (GBP) exchange rate movement is likely to be more focused on Brexit news in the coming week.
Any indications that the second phase of Brexit negotiations will go smoothly or hopes that it will finish before the Brexit date of March 2019 could make the Pound more appealing.
Britain’s final Q3 Gross Domestic Product (GDP) results will be published next Friday and could boost the Pound if it beats expectations.
Failing that though, there is little in the way of data that could influence the Pound to Australian Dollar exchange rate.
Apart from Tuesday’s Reserve Bank of Australia (RBA) meeting minutes, Australia’s economic calendar will be quiet until the end of the year.
Australian Dollar trade is more likely to be influenced by shifts in risk-sentiment and commodity price news.