Optimistic Outlook from UK Brexit Secretary Causes GBP/AUD Exchange Rate Rise
The Pound (GBP) has risen by 0.4% against the Australian Dollar (AUD) today, hitting an interbank exchange rate of AU$1.765.
Brexit Secretary Dominic Raab has been partly responsible for this GBP/AUD exchange rate rise, as he has forecast continued UK stability even after a no-deal Brexit.
Perhaps the most supportive aspect of Mr Raab’s remarks was the confirmation that the UK will continue to work with the EU even if it crashes out of the union.
Warning of EU Resistance to Brexit Compromise Limits GBP/AUD Exchange Rate Gains
Outside of Mr Raab’s remarks, today’s Pound Sterling to Australian Dollar (GBP/AUD) exchange rate gains have been limited by a recent warning about Brexit negotiations.
EU Chief Negotiator Michel Barnier was recently asked about compromising EU principles to secure a Brexit deal by the October deadline.
GBP traders were rattled by Mr Barnier’s answer, as he responded by saying:
‘Why would we? How can you change principles on which the European Union is based?’
Fear of Australian Leadership Challenge Cause Australian Dollar to Pound (AUD/GBP) Exchange Rate Losses
For all the uncertainty that Brexit has caused today, Pound Sterling (GBP) has still advanced against the Australian Dollar (AUD) because of greater uncertainty among AUD traders.
The future leadership of the Australian government is in question because of dissent in the Liberal Party of Australia (LPA), the largest member of the ruling coalition.
LPA leader and Prime Minister Malcolm Turnbull faces an internal feud that has culminated in an attempted leadership challenge by then-Minister for Home Affairs Peter Dutton.
Mr Turnbull survived a challenge by Mr Dutton on Monday, but Friday is set to bring a turbulent end to the week as the PM will reportedly be asking for a show of support.
The Prime Minister has stated that he will resign if enough MPs oppose him, which leaves the very real opportunity of a leadership contest over the coming weeks.
This has all been bad news for Australian Dollar traders because it risks causing widespread political disruption and bringing a potential shift in government policy and outlook.
Forecast: Pound Sterling to Australian Dollar Exchange Rate Volatility ahead on Building Permit Data
The next major Australian economic data to watch out for isn’t due until this time next week, when building permit data will come out on 30th August.
July’s reading is predicted to show a sharp drop in the number of permits granted during the month, with a shift from 6.4% to -1.81%.
The Australian Dollar (AUD) could decline against Pound Sterling (GBP) on such results, as fewer permits being granted would imply reduced construction sector activity in the future.