Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Rebounds from Boxing Day Risk Rally

Pound to Australian Dollar (GBP/AUD) Exchange Rate Returns to Week’s Opening Levels

After trending higher earlier in the week on risk-aversion and weakness in global equity markets, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate slipped overnight before steadying again this morning.

GBP/AUD briefly trended almost two cents higher than the week’s opening levels on Christmas day. The inter-bank level touched a two-month-high of AU$1.81 before sliding back.

GBP/AUD dipped below the week’s opening levels on Wednesday night before rebounding slightly and trending closer to the opening levels again.

Amid a lack of notable UK or Australian ecostats due for publication this week, the Pound to Australian Dollar exchange rate is reacting more to shifts in global risk sentiment and stock market news.

Currently, the GBP/AUD exchange rate is trading at an inter-bank rate of AU$1.79.

Pound (GBP) Exchange Rate Volatility Persists over Festive Period

The Pound (GBP) has had a difficult month, slumping on UK political uncertainties and deepening complications in the Brexit process.

Despite 2018 coming to an end and the formal Brexit date now just over three months away, UK political worries have worsened rather than any fresh clarity coming in.

Rather than markets having any solid idea of how the Brexit process will unfold, fears persist that the UK could leave the EU without any kind of deal.

UK Prime Minister Theresa May’s long-negotiated UK-EU Brexit withdrawal deal is seemingly still lacking the necessary support to pass through Parliament.

If Parliament cannot agree on how Britain should leave the EU, markets fear that a ‘soft’ Brexit will be increasingly difficult to achieve. This concern has led to ‘no-deal Brexit’ jitters returning and the Pound being too volatile to invest in.

Australian Dollar (AUD) Exchange Rate Driven by Risk-Sentiment

Earlier in the week, the Australian Dollar (AUD) was left looking unappealing as a US government shutdown left investors hesitant to take risks. This, coupled with signs of slowing global growth, left the Australian Dollar less appealing in the first half of the week.

During Wednesday’s American session, demand for the Australian Dollar was briefly bolstered by a surge in stock markets, particularly US stock markets.

It followed last week, when stocks saw their worst weekly falls since the financial crisis.

Demand for US stocks rose on signs of strong US retail spending during the holiday season, as well as assurances from the US government that Federal Reserve Chairman Jerome Powell’s job was safe despite criticism from US President Donald Trump.

The Australian Dollar was ultimately unappealing again on Thursday however as investors reacted to the latest Chinese data

Data showing that Chinese industrial profits fell for the first time since December 2015 has made it easier for GBP/AUD to hold its ground today.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Could React to Data Tomorrow

With UK political uncertainties still weighing heavily on Sterling (GBP), the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to remain sensitive to shifts in global market risk-sentiment.

Analysts speculate that the US Senate could resolve the government shutdown before the weekend, but others suggest it could last through until January.

This is likely to make investors hesitant to take risks and will continue to weigh on the risky Australian Dollar (AUD).

Some notable Australian and UK data due for publication on Friday includes Australia’s November private sector credit and Britain’s November finance mortgage approvals results.

However, with political and global risk-sentiment the primary driving forces in the Pound to Australian Dollar (GBP/AUD) exchange rate this week, these factors are likely to remain in focus and data is not likely to be influential.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard