Update: Pound Keeps Climbing vs Australian Dollar on Hopes for Brexit Deal
The Pound to Australian Dollar (GBP/AUD) exchange rate was riding high on Wednesday as speculation that the UK may soon be able to progress with Brexit trade talks kept Sterling supported.
GBP/AUD jumped 0.8% on the day’s opening levels and could rally further if issues with the Irish border don’t escalate.
Update: Brexit Bill News Sends GBP/AUD Exchange Rate Higher
On Wednesday the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate jumped to some of its best levels since the UK’s vote to Brexit.
The interbank GBP/AUD exchange rate hit highs of AU$1.7696 on the news that the UK and EU had come to terms over the Brexit divorce bill.
Sterling also surged against the Euro, Canadian Dollar and New Zealand Dollar.
Update: Pound Sterling to Australian Dollar Exchange Rate Climbs after Bank of England Review
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate edged higher on Tuesday as the Bank of England’s (BoE) financial stability report indicated that UK banks would be able to cope with a ‘disorderly’ Brexit.
BoE Governor Mark Carney asserted; ‘The (BoE) … judges that the banking system can continue to support the real economy, even in the unlikely event of a disorderly Brexit.’
The interbank GBP/AUD exchange rate hit a high of AU$1.7550 and remains trending around that level.
AUD Exchange Rate Outlook: Concerns Australian Growth is Slowing Weigh on the Dollar
The GBP/AUD exchange rate started last week on strong footing, with the currency pairing gain’s being partly prompted by the release of minutes from the latest Reserve Bank of Australia (RBA) policy meeting.
The Australian Dollar tumbled as the RBA minutes revealed that policymakers remain concerned about the impact of slow domestic wage growth.
However, GBP/AUD’s gains proved to be short lived as the UK public deficit unexpectedly widened and the Australian Dollar was bolstered by rising iron ore prices.
The exchange rate later fluctuated again as UK business investment appeared to dry up in the third quarter.
Sterling did manage to recoup some of its losses before the weekend, however, as a Bank of England (BoE) official suggested that Brexit would not necessarily mean that monetary policy would remain accommodative.
Australian Dollar Exchange Rate Fluctuates as Consumer Spending Pressured by Household Debt
The Australia Dollar started this week on the back foot following a report from Morgan Stanley which suggested that Australia’s current ‘consumption crunch’ may persist into 2018.
Consumer spending is currently being pressured in Australia by high household debt and increased energy costs at a time when wage growth remains subdued.
Fears that this trend may continue into the New Year have caused analysts at Morgan Stanley to suggest that growth in Australia may lag behind other countries in 2018.
Analysts at the bank said; ‘The household sector is key to our negative view, as the consumer is being squeezed by record-low income growth (with average wages falling), increasing cost-of-living pressures and tighter credit conditions as regulators continue to crack down on mortgage lending.’
Pound Sterling Slips on Brexit Concerns
The British Pound is struggling to take advantage of any weakness in the Australian Dollar however, with the pairing being undermined by fresh Brexit concerns.
Investors are currently wary over how the issue regarding the UK’s border with Ireland will shape Brexit talks, particularly as the Irish Republic’s EU commissioner Phil Hogan told the Observer that Dublin would ‘play tough to the end’.
This comes as the Irish government threatens to block the start of Brexit trade discussions next month unless the UK government makes guarantees over the border with Northern Ireland, with the Irish government keen to avoid a hard border.
Data Affecting This Week’s GBP/AUD Exchange Rate Forecast
28th November 07:00 UK BoE Financial Stability Report
28th November 07:00 UK Nationwide House Prices (Nov)
29th November 09:30 UK Mortage Approvals (Oct)
30th November 00:00 AU HIA New Home Sales MoM (Oct)
30th November 00:05 UK Consumer Confidence (Nov)
30th Novemver 22:30 AU Manufacturing Index (Nov)
GBP/AUD Forecast: What Impact will the BoE Financial Stability Report have on Sterling?
Looking ahead the BoE will publish its latest Financial Stability Report tomorrow and investors will be keen to pore over its banking stress test, particularly given that the BoE warned over the dangers posed by ballooning levels of consumer debt in previous Financial Stability Reports.
British Pound may also be weakened at the start of this week’s session by the release of the UK’s latest housing data, with house price growth expected to have remained flat this month and mortgage approvals projected to have tumbled in October.
Meanwhile, with little domestic data expected to impact the Australian Dollar forecast until the second half of the week, the Antipodean currency may find itself fluctuating in response to movement in commodity markets, particularly if there are any shifts in the price of iron ore, which accounts for roughly a quarter of Australian exports.