GBP/AUD Exchange Rate Ticks Higher on Slow Data Day
UPDATE: The Pound Australian Dollar (GBP/AUD) exchange rate has continued to rise today, mainly as an extension of Monday’s advance.
Brexit Secretary Dominic Raab put Pound Sterling on its current positive course by indicating that he supported continued efforts to secure a beneficial Brexit deal.
Today’s Brexit news has been limited and worrying – following the release of government plans for a no-deal Brexit, International Air Transport Association (IATA) Director General Alexandre de Juniac has warned:
‘The UK government’s papers on the air transport implications of a ‘no-deal’ [Brexit] clearly expose the seriousness of what is at stake and underscore the huge amount of work that would be required to maintain vital air links.’
GBP/AUD Exchange Rate Rises Higher on Growing Hopes for Brexit Agreement
UPDATE: The Pound Australian Dollar (GBP/AUD) exchange rate has continued to improve today, rising to an inter-bank exchange rate of AU$1.80.
This appreciation comes after Brexit Secretary Dominic Raab indicated that there could be progress in Brexit talks despite last week’s breakdown of relations.
There haven’t been any additional statements from Mr Raab or Theresa May today, but for now the Pound is still riding high on hopes for the UK securing some kind of Brexit deal.
Hopes for UK-EU Brexit Agreement Push GBP/AUD Exchange Rate Higher
The Pound (GBP) has risen by 0.6% against the Australian Dollar (AUD) today, which has enabled Pound Sterling to hit an inter-bank exchange rate of AU$1.80.
This appreciation has been caused by remarks from Brexit Secretary Dominic Raab, which have reassured GBP traders about Brexit.
Speaking on TalkRadio, Raab indicated that despite last week’s setbacks, the UK was still optimistic about securing a Brexit agreement with the EU:
‘We keep on negotiating in good faith, we try and get the best deal we can, but we are ready for all eventualities. I’m confident we’ll get there.’
These remarks came in the context of last week’s EU summit in Salzburg, where Prime Minister Theresa May had her ‘Chequers plan’ roundly rejected by EU leaders.
The Pound fell sharply against the Australian Dollar on the news and today’s GBP/AUD exchange rate rise is only a recovery for Sterling, instead of being fresh gains.
Australian Dollar to Pound (AUD/GBP) Exchange Rate Dips on Fed Rate Hike Fears
On the other side of the currency pairing, the Australian Dollar (AUD) has fallen against the Pound (GBP) and most other peers today.
This all-round decline comes ahead of this week’s US Federal Reserve interest rate decision.
The US central bank is widely expected to raise interest rates from 2% to 2.25%, which could push the US Dollar up and devalue the Australian Dollar.
Higher US interest rates make the US Dollar a more attractive currency for investors, so the fear is that the Australian Dollar will suffer from reduced risk sentiment.
GBP/AUD Forecast: Will Pound Sterling Recover on BoE Speech and GDP Stats?
This week, Pound/Australian Dollar exchange rate movement may be driven by comments from the Bank of England (BoE) and some late-week confidence and GDP data.
First up will be a speech from the BoE’s Gertjan Vlieghe on Tuesday. Vlieghe could boost the GBP/AUD exchange rate if he points to a future interest rate hike.
Beyond this, GBP traders will have to wait until Friday for a UK GfK consumer confidence reading and finalised GDP figures for Q2 2018.
Before then, the Australian Dollar could be weakened by Wednesday’s Fed interest rate decision, if it brings the expected interest rate hike.
Getting back to the UK, Friday’s initial consumer confidence measurement isn’t expected to print positively; a forecast-matching downgrade from -7 points to -8 could worsen GBP/AUD.
The later GDP readings might be enough to restore confidence among Pound Sterling traders and raise the UK currency’s value, assuming that they match up with forecasts.
Current expectations are for a faster pace of economic growth on the quarter and the year in Q2 2018, which would bode well for the third quarter print.
Outside of these scheduled economic announcements, the Pound to Australian Dollar exchange rate could also be affected by any Brexit news.
If UK or EU negotiators announce a breakthrough in Brexit talks then the Pound could rise sharply and recover lost ground against the Australian Dollar.