Pound Australian Dollar (GBP/AUD) Exchange Rate Muted as MPs Back Bill by Majority of One
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate traded flat on Thursday morning, and the pairing is currently trading at an inter-bank rate of AU$1.8499.
On Wednesday evening, the House of Commons voted by a majority of one to force the Prime Minister to request an extension to the Brexit process.
The draft legislation from Labour’s Yvette Cooper would force Theresa May to request an extension of Article 50 from the EU.
The Bill would also give Parliament the power to decide the length of the extension, however the government said this would place ‘severe constraint’ on its ability to negotiate with the EU.
Brexit optimism likely offset the gains made by the ‘Aussie’ over the course of Wednesday.
However, the Bill still requires backing from the House of Lords and Royal assent before it becomes law.
Pound Australian Dollar (GBP/AUD) Exchange Rate Slides on Record High Aussie Trade Surplus
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate has continued to fall this afternoon, and the pairing is currently trading at an inter-bank rate of AU$1.1.8487.
Data revealed that in February, Australia recorded its largest trade surplus on record surpassing the previous record from December 2016.
The Australian Bureau of Statistics (ABS) reported that Australia’s trade surplus rose to a higher-than-forecast $4.8 billion, while January’s figure was revised down slightly to $4.35 billion.
Australia has now recorded a trade surplus in excess of $1.5 billion for the last nine consecutive months largely due to firmer commodity prices.
Commenting on this, Senior Economist at Westpac Bank, Andrew Hanlan said:
‘The trade balance has strengthened from a $2.9 billion surplus on average in the December quarter to a $4.6 billion average in the March quarter. The bulk of this improvement likely reflects higher commodity prices.
‘The lift in prices is boosting Australia’s national income, which is flowing through to higher tax revenues, providing the government with additional fiscal flexibility as evident in the recent budget updates.’
Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as Aussie Retail Sales Soar
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slipped over the course of the morning, and the pairing is currently trading at an inter-bank rate of AU$1.8533.
Data released at the start of Wednesday revealed that Australia’s seasonally adjusted retail sales rose by a better-than-forecast 0.8% in February.
This was the largest monthly increase since November 2017.
It is likely the data will be welcomed by the Reserve Bank of Australia (RBA), as it may help to ease uncertainty over the near-term outlook on household spending with respect to interest rate policy.
Sterling (GBP) Slides as UK Services Slips into ‘Quicksand’
Sterling (GBP) slumped further against the Australian Dollar (AUD) following the release of the UK services PMI, which fell below the 50-mark.
March’s PMI slumped to 48.9, with the data finding that new orders fell for the third consecutive month, and prices charged increased at the slowest pace since June 2017.
Business activity declined for the first time in more than two-and-a-half years, further dampening Sterling.
Commenting on the data, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply said:
‘With the headline index posting just below 50 for the first time since July 2016 this month’s results are a seriously worrying development. New orders fell for the third consecutive month and a drop in overall business activity for the first time in two and a half years has left the services sector facing a bleak near-term outlook.
‘A fight for survival beckons if this market stagnation becomes entrenched, the global economy remains downbeat and the Brexit cloud is not lifted. With business expectations in the sector still close to the weakest seen over the past decade, this inertia will fast become the new normal unless some major change pulls the sector out of the quicksand.’
Australian Dollar (AUD) Buoyed as 90% of US-China Trade Agreement Done
China’s Caixin services PMI rose to a better-than-expected 54.4 in March, further buoying the risk-sensitive ‘Aussie’.
Added to this, reports surfaced suggesting that the US and China are coming closer to a final trade agreement.
It was reported late on Tuesday that US and Chinese Officials have resolved most of the outstanding issues, however they are still haggling over how to implement and inforce the agreement.
Executive Vice President for International Affairs at the US Chamber of Commerce, Myron Brilliant told reporters 90% of the deal is done.
Sterling (GBP) Slips as PM Announces Cross-Party Talks
On Wednesday, Prime Minister Theresa May is expected to meet Labour leader Jeremy Corbyn in an attempt to break the current Brexit deadlock.
Yesterday, after more than seven hours of talks with her Cabinet, the Prime Minister announced her plan to meet Corbyn for Brexit talks.
May also announced her intention to ask the European Union for an extension to the Brexit deadline, however this could do little to buoy Sterling (GBP) against the Australian Dollar (AUD).
Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Rise on Disappointing Aussie Construction?
Looking ahead to tomorrow, the Australian Dollar (AUD) could slip against the Pound (GBP) following the release of the AiG Performance of Construction Index.
If construction contracts further in March, sentiment in the ‘Aussie’ could slide.
As there is an absence of UK economic data releases for the rest of the week, it is likely that Brexit will remain the main catalyst for movement in Sterling.
If the EU grants a Brexit extension past 12 April, it is likely the Pound Australian Dollar (GBP/AUD) exchange rate will rise.