Update: Pound to Australian Dollar Exchange Rate Trends Above Week’s Opening Levels
At the time of writing on Monday afternoon, the Pound to Australian Dollar (GBP/AUD) exchange rate continued to trend within a tight region near the interbank level of 1.75.
GBP/AUD has recovered most of last week’s losses since last Thursday, but ‘no deal’ Brexit fears have been keeping a lid on Sterling (GBP) strength.
Investors are highly anticipating UK job and wage data on Tuesday, as well as UK inflation stats on Wednesday, which could bolster Pound support if they impress.
Risk Aversion Helps Pound to Australian Dollar Exchange Rate Edge Higher
Investors haven’t been particularly eager to buy the Pound (GBP) thanks to last week’s Brexit reports, but broad risk-aversion and Central Bank developments have helped the Pound to Australian Dollar (GBP/AUD) exchange rate recover some of its earlier losses.
‘No deal’ Brexit fears caused GBP/AUD to slump from last week’s opening interbank levels of AU$1.75 to Thursday’s six-month-low of AU$1.72.
GBP/AUD recovered slightly before the weekend, closing the week at AU$1.74.
While Brexit uncertainties are still weighing on Sterling, GBP/AUD was able to break away from last week’s worst levels amid escalating tensions between the US and China, currency jitters in Turkey and the RBA’s more cautious tone on Australian inflation.
Pound (GBP) Exchange Rate Recovery Limited, ‘No Deal’ Brexit Concerns Remain
Growing concerns about whether Britain is facing a ‘no deal’ Brexit drove the Pound broadly lower for the first half of last week.
UK Trade Secretary Liam Fox notably predicted that the odds of a ‘no deal’ Brexit are now as high as 60-40 due to difficulties in negotiations.
Attempts from the UK government to damage control his statements were largely brushed over by investors.
On top of concerns that the UK may not reach a Brexit deal with the EU, investors have also been disappointed by data indicating that UK economic activity is being negatively impacted by Brexit uncertainty.
Last Friday’s quarterly UK Gross Domestic Product (GDP) result met forecasts, but June’s monthly result slowed more than expected to just 0.1%.
Australian Dollar (AUD) Exchange Rates Slump on Risk-Aversion and Domestic Concerns
The Australian Dollar’s (AUD) recovery rally against currencies like the Pound (GBP) lasted for most of July. However, the rally may have ended last week as a series of global uncertainties and the latest Reserve Bank of Australia (RBA) developments provided cause for concern.
As trade threats between the US and China escalated last week, the commodity-correlated Australian Dollar became less appealing.
On top of this, late last week the Turkish Lira (TRY) plummeted, sending markets into a panic and triggering broad-based losses in higher-risk currencies.
The Reserve Bank of Australia’s (RBA) latest economic forecasts concerned investors too. In its latest statement of monetary policy, the bank downgraded its inflation outlook, leaving investors even more bearish about when the bank could potentially hike Australia’s record-low interest rates.
Pound to Australian Dollar (GBP/AUD) Forecast: Job Market Results and Confidence Data Ahead
While most recent Pound to Australian Dollar (GBP/AUD) exchange rate movement has been due to risk-sentiment and political news, slews of economic data from the UK and Australia are set to have an impact this week.
Tuesday will see the publication of Australia’s July NAB business confidence results and Britain’s latest job market report – including wage growth figures.
Australia’s own wage price data for Q2 will be published on Wednesday, as will Westpac’s Australian consumer confidence index.
Wednesday will also see Britain’s July inflation results published, which could prove to be the week’s most influential dataset for GBP/AUD. The Pound could stumble if UK inflation falls short of forecasts.
Final figures to look out for include Australia’s employment figures and British retail sales stats.