The Pound to Australian Dollar exchange rate advanced on Monday as investors dwelt on the possibility that the House of Lords may make amendments to the Article 50 bill before it is passed and Brexit proceedings begin.
The interbank GBP/AUD rate improved from 1.61 to 1.62.
Pound (GBP) Benefits from House of Lords Speculation
While the Article 50 bill passed through the House of Commons smoothly, some believe that the House of Lords will introduce amendments.
The House of Lords, which does not have a Conservative majority, is expected to be address concerns that were not amended by the House of Commons.
A former MP and current Labour House of Lords member Peter Mandelson stated he believed that House of Lords peers would at least fight for amendments on the rights of EU citizens living in Britain as well as giving MPs more input on the final Brexit deal.
Some traders hope that other amendments, such as a greater focus on single market access, could still be made – leaving Sterling more appealing.
Australian Dollar (AUD) Slips Ahead of RBA Meeting Minutes
Last week saw the Australian Dollar advance on the Pound, although mixed Australian data and psychological restrained ‘Aussie’ gains. Increasingly high Federal Reserve interest rate hike bets have also limited Australian Dollar demand.
Additionally, last week saw the publication of Australia’s January unemployment report. While the figures were generally optimistic, news that Australian full-time employment had fallen much further than predicted made it difficult for the ‘Aussie’ to continue rallying.
On Monday, AUD traders adjusted their positions ahead of Tuesday’s Reserve Bank of Australia (RBA) meeting minutes.
GBP/AUD Forecast: RBA Minutes and UK Public Borrowing in Focus
Any Article 50 developments from the House of Lords throughout Monday and Tuesday are likely to influence the Pound to Australian Dollar exchange rate.
If the Article 50 bill passes with no amendments after all, Sterling could quickly shed its Monday gains. If amendments are made, the bill will be sent back to the House of Commons before it can be passed.
During the Asian session, the Reserve Bank of Australia’s (RBA) meeting minutes will be published. The ‘Aussie’ will strengthen if the minutes are hawkish or contain hints of future monetary policy tightening but will conversely fall if it appears that a rate cut is being considered.
Tuesday’s European session will see the publication of Britain’s January public sector net borrowing results. The deficit is predicted to have lightened considerably due to the tax returns handed into the government in January.
If it comes in even lighter than predicted, the Pound to Australian Dollar exchange rate is likely to strengthen.
Traders are also awaiting Britain’s Q4 Gross Domestic Product (GDP) projections, which are due to come in on Wednesday.