Pound to Australian Dollar Exchange Rate Fails to Hold Gains as Brexit Concerns Keep Pressure on GBP
UPDATE Thursday 14:28 BST: Since falling on Wednesday, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has struggled to advance again.
At the time of writing on Thursday afternoon, GBP/AUD was trending in the region of 1.78, close to the week’s opening levels.
Demand for the Pound (GBP) was weakened by rising concerns from economists and businesses about the lack of progress in Brexit negotiations in recent months.
Australian Dollar (AUD) performance was also limited too, amid a lack of domestic support and persistent concerns about US-China trade tensions.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Falls from Highs as US Shows Signs of Holding Back on Trade Measures
UPDATE 15:07 BST: After spending much of the week so far touching interbank highs of 1.79, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate tumbled back to near the week’s opening levels on Wednesday.
News that US President Donald Trump appeared to be rowing back on some of his more controversial plans for trade with China relieved markets.
It bolstered hopes that US-China trade tensions would ease, making investors more eager to take risks and buy trade-correlated currencies like the Australian Dollar (AUD) from their lows.
Pound to Australian Dollar Exchange Rate Slips from Highs as UK Economic Uncertainties Persist
Ahead of Friday’s key data, investors have had little reason to keep buying Pound Sterling (GBP), making it difficult for the Pound to Australian Dollar (GBP/AUD) exchange rate to hold onto its best levels.
Since opening this week at the interbank level of 1.78, GBP/AUD has largely trended higher, touching highs in the region of 1.79. However, at the time of writing on Wednesday, GBP/AUD had slipped back into the region of 1.78.
Today, the Australian Dollar (AUD) remains weak on global trade jitters, with markets increasingly anxious about the possibility of a US-sparked trade war.
Meanwhile, Sterling has benefitted slightly from Bank of England (BoE) interest rate hike bets. However, its gains have been limited by dovish comments from the bank’s incumbent policymaker and concerns from businesses about the slow pace of Brexit talks.
Pound (GBP) Exchange Rate Strength Limited by Worries about Dovish New Bank of England (BoE) Policymaker
Sterling (GBP) has easily been able to advance against a depressed Australian Dollar (AUD) this week so far, but it has remained weak against other major currencies due to Bank of England (BoE) uncertainties.
While the BoE did take a more hawkish than expected tone regarding monetary policy during its June policy decision last week, many investors want to see more key UK data before rushing into the Pound on BoE rate hike bets.
Concerns that Britain’s upcoming growth results could fall short of expectations have meant Pound traders are anticipating Friday’s session.
On top of this, Tuesday’s speech from Bank of England (BoE) policymaker-in-waiting Jonathan Haskel was perceived as dovish, making investors concerned that the bank could be slightly less aggressive on monetary tightening when Haskel’s term begins in September.
Australian Dollar (AUD) Exchange Rates Fail to Hold as Trade Uncertainties Persist
This week, concerns that a global trade war could be sparked as trade tensions rise between the US and rival nations only worsened. This has left investors hesitant to buy risky trade-correlated currencies like the Australian Dollar (AUD).
Australian Dollar trade has been limp despite stronger prices of commodities like oil and iron ore, as Australia’s economy benefits heavily from trade with the US and China.
Sturdiness in US Dollar (USD) trade has also limited Australian Dollar demand, as the US currency has rebounded slightly from losses seen at the beginning of the week.
The Australian Dollar’s domestic support has been poor too, giving investors more reason to sell the ‘Aussie’ than buy it.
Pound to Australian Dollar (GBP/AUD) Forecast: Central Bank and Trade Speculation to Persist
Bank of England (BoE) speculation will continue to drive the Pound (GBP) for the remainder of the week – including the market reaction to Friday’s UK growth results.
Meanwhile, Australian Dollar (AUD) trade will remain focused on global trade policy developments, although Friday’s Australian data could influence movement too.
Markets are still anxious regarding the protectionist stance being taken by the US government. Other nations appear to be hitting back with similar trade tariffs and tensions have only risen further.
Unless there are signs of these tensions easing, the Australian Dollar is unlikely to see much demand in the coming days.
Thursday’s session will likely see GBP/AUD trending similarly, unless Bank of England Chief Economist Andy Haldane surprises Pound traders in his Thursday speech or there are surprising trade developments.
In the absence of any unanticipated central bank or trade policy news, Friday’s session is likely to be the most influential of the week for GBP/AUD.
Australia’s new home sales data and private sector credit from May, as well as Britain’s final Q1 growth rate and Q1 business investment figures could drive some late-week Pound to Australian Dollar (GBP/AUD) exchange rate movement, but we shall have to wait and see.