GBP/AUD Exchange Rate Falls Sharply as Australian Dollar Rallies
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate has fallen by -1% today, hitting an inter-bank exchange rate of AU$1.82.
This slump has been caused by supportive Australian news and worrying UK developments – in the former case, Reserve Bank of Australia (RBA) minutes came out this morning.
Covering the Australian central bank’s latest meeting, the minutes led analysts at Danske Bank to predict a 0.25% interest rate hike is likely ‘in the next 12 months’.
While this is a large window for an RBA rate hike, this is still a highly optimistic forecast as the RBA hasn’t raised interest rates since November 2010.
On the UK side of proceedings, growing concerns about the Brexit process have once again reduced demand for Pound Sterling.
The latest worry stems from Prime Minister Theresa May’s assertion that if MPs reject the proposed ‘Chequers deal’ then a no-deal Brexit could be unavoidable.
GBP/AUD Exchange Rate Static as IMF Warns about Post-Brexit Damage
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate has made little additional movement today, remaining at an interbank exchange rate of AU$1.82.
This lack of movement comes despite notable warnings about Brexit from the International Monetary Fund (IMF), which believes that Brexit by any means will harm UK economic growth.
IMF Deputy Director Philip Gerson has summed up these pessimistic predictions, saying:
‘The UK will be permanently smaller [after Brexit] and that means permanently lower revenues.’
GBP/AUD Exchange Rate Drops on Downgraded UK Growth Forecasts
A worsening outlook for UK economic growth has weakened the Pound (GBP) today, causing a minor loss against the Australian Dollar (AUD).
The GBP/AUD pairing has hit an interbank exchange rate of AU$1.82; although this is still near the best exchange rate since April this year.
Today’s UK economic news has been negative for the most part, with British Chambers of Commerce (BCC) officials cutting their 2018 and 2019 growth forecasts.
The 2018 growth outlook has been cut from 1.3% to 1.1%, while in 2019 BCC economists are predicting a 1.3% growth rate, down from the earlier prediction of 1.4%.
BCC Director General Adam Marshall has blamed Brexit for the downgrade, saying:
‘Brexit uncertainty continues to weigh heavily on many firms, as most of the practical questions facing trading businesses remain unanswered.
‘The lack of precision on the nature of the UK’s future relationship with the EU is lowering expectations for both business investment and export growth.
‘Businesses need the Brexit negotiations to deliver clarity, precision and results at pace over the coming weeks.’
One slightly more Pound supportive piece of news comes in the form of Austrian Chancellor Sebastian Kurz speaking out against a no-deal Brexit outcome, saying:
‘We have the same view that we must do all we can to avoid a hard Brexit.’
Some of the Pound’s losses over previous weeks have been down to fears of a no-deal Brexit, so this statement has somewhat reassured GBP traders.
Australian Dollar to Pound Exchange Rate Tight on US-China Trade Conflict
While the Australian Dollar (AUD) has ticked higher against the Pound (GBP) today, AUD/GBP exchange rate gains have been limited by ongoing global trade concerns.
AUD traders are worried that an escalation of the US-China trade spat could see Australia caught in the crossfire, leading to reduced activity for both nations.
The current assumption is that the US will intensify its tariff action against China, causing the latter to respond in kind and create further AUD weakness.
GBP/AUD Outlook: Will Pound Sterling Drop on Lower UK Inflation Rate?
This week, Pound Sterling/Australian Dollar exchange rate movement may be caused by UK inflation data on Wednesday, as well as retail sales stats out on Thursday.
The inflation figures for August are expected to show an annual slowdown from 2.5% to 2.4%, alongside a monthly rise from 0% to 0.5%.
If both of these readings match forecasts then the Pound to Australian Dollar exchange rate could drop, mainly because lower inflation puts less pressure on the Bank of England (BoE) to raise interest rates.
The retail sales data could prove equally disappointing and the Pound is likely to slide in value if a forecast-matching sales slowdown is reported.
The Pound could also be affected by Thursday’s EU summit on Brexit – if EU leaders suggest that talks are progressing smoothly then Sterling could make a recovery.
On the other side of the pairing, the Australian Dollar might be boosted twice this week on Reserve Bank of Australia (RBA) news.
RBA meeting minutes are out on Tuesday, followed by a bulletin on Thursday. If both releases point to a 2019 interest rate hike then the Australian Dollar could rise sharply against the Pound.