Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Continues to Rally

GBP/AUD Exchange Rate Begins to Stabilise as Better-Than-Expected British Factory Order Data Revealed

UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate has continued to fluctuate as the Governor of the Bank of England, Mark Carney, refused to be drawn today on the answer to whether interest rates will rise or fall after Brexit, emphasising that it depends on the outcome.

At the same time, British factory orders rallied in November despite falling in October according to the monthly survey from the Confederation of British Industry (CBI).

The better-than-expected figure showed a that it had risen from 10 compared to last month’s -6 despite a prediction of a fall to -7 causing some bullish sentiment for Sterling.

GBP/AUD Exchange Rate Pushes Back against Australian Dollar

The Pound Australian Dollar (GBP/AUD) exchange rate has continued to push back from the slump at the end of last week and over the weekend from a low of AU$1.79 to a high of AU$1.77 this morning.

Today the Governor of the Reserve Bank of Australia (RBA) Philip Lowe presented his speech, which seemingly focused on the theme of ‘trust’, concluding with the statement that the ‘Board does not see a strong case for a near-term change in interest rates,’ and ‘overall, it [the Australian economy] is quite a positive picture’.

Meanwhile, Bank of England (BoE) Governor Mark Carney was also giving a speech, this one to a Treasury select committee in the Commons.

He said that Sterling will undoubtedly suffer volatility if the UK leaves the European Union without a deal, further noting that it would be a no-deal Brexit would be ‘a large negative shock to the economy’.

Despite this, Carney noted that the BoE is preparing for a no-deal Brexit, and had been doing so since June 2016 as a precautionary measure.

May Rejects Talk of Extended Brexit Transition Period from Barnier

The possibility of a Brexit transition extension was proposed by Europe’s chief Brexit negotiator, Michel Barnier, as he floated the idea of extending the transition period until the end of 2022.

If this extension is accepted it would ultimately see the UK resuming to follow EU laws and European Court of Justice rulings without having any British MEPs or ministers within the EU having any say in decision making processes.

John Allan, president of the Confederation of British Industry, was dismissive of the idea, telling BBC Radio 4:

‘I think he’s trying to be helpful and trying to reduce the risk that the backstop will be needed. Him saying it just at this moment may not be particularly helpful.’

Theresa May later rejected Barnier’s informal offer of an extension period out of hand, saying ‘We don’t think we’ll need any extension to the implementation period.’

GBP/AUD Exchange Rate Continues to Climb Despite Disappointing Housing Data

With Brexit remaining at the forefront of UK politics, Sterling remains volatile at the start of this week’s session against other major currency pairings.

Despite this, Sterling has managed to push back against the ‘Aussie’ despite disappointing UK house price figures released by Rightmove on Monday.

The figures showed that housing prices in the UK had dropped, with the average asking price for a house dropping by 0.2% compared to last year.

The largest drops in prices were felt in former UK hot spots, such as London, where they slid by 1.7%.

Meanwhile, the threat of a vote of no-confidence still looms over Prime Minister Theresa May, although the number of letters needed has not been reached – with only 26 MPs having made their decision public.

GBP/AUD Exchange Rate Plummets Following APEC Trade Tensions

The Australian Dollar has weakened against the Pound following reignited trade tensions between the US and China, despite the assumption that the tensions were beginning to thaw.

Despite reports stating that there was a potential lessening of tension between China and the US, it has been suggested that there will not be any breakthroughs between the superpowers at the G20 Summit.

This became clear at the Asia-Pacific Economic Cooperation (APEC) meeting over the weekend where US Vice President Mike Pence and Chinese President Xi Jinping chose to escalate rather than diffuse tensions causing the risk-sensitive ‘Aussie’ to drop against most major currencies.

GBP/AUD Exchange Rate to Remain Volatile on Back of Brexit and US-China Tensions

The focus still remains on Theresa May, and whether or not she can keep a firm grasp on her leadership with the threat of a no-confidence vote hanging over her.

If such a vote is triggered it will undoubtedly cause a new bout of volatility, with the GBP/AUD exchange rate liable to slump once again.

The potential US-China trade war could cause issues for the ‘Aussie’, and would likely be a catalyst for a slump against the major peers.

With a dearth of Australian ecostats due for publication this week, GBP/AUD is likely to be driven by political developments, with markets focusing on Brexit headlines to weigh up sentiment.

Hannah Wilson

Contact Hannah Wilson