GBP/AUD Resumes Climb in Reaction to Concerning Australian and Chinese Data

Pound to Australian Dollar Exchange Rate Advances despite Brexit Uncertainty Weighing on Sterling

UPDATE: Despite a lack of demand for the Brexit-battered Pound (GBP) this morning, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate began to advance again today.

Investors sold the Australian Dollar (AUD) across the board as the latest Australian and Chinese data worsened concerns about the impact that a trade war could have on Australia’s economy going forward.

China is Australia’s biggest trade partner, so poor Chinese industrial production and retail sales stats this morning dampened Australian Dollar appeal.

On top of this, Australia’s Q1 wage price index fell slightly short of expectations quarter-on-quarter, worsening concerns that Australia’s job market isn’t as resilient as hoped ahead of tomorrow’s major Australian job market report.

Pound to Australian Dollar Exchange Rate Unable to Keep Climbing amid Brexit Uncertainties and US-China Trade Hopes

While the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate continues to trend above the week’s opening levels, it has increasingly struggled to hold its ground.

Sterling (GBP) remains under pressure amid expectations that cross-party Brexit talks would fail.

The Australian Dollar (AUD) did a better job of holding above its lows thanks to optimistic comments from US President Donald Trump, who continued to say that he believed a good US-China trade deal could be made.

Pound to Australian Dollar Exchange Rate Holds Some Gains amid Broad ‘Aussie’ Weakness

Investors have been selling the Pound (GBP) against most major currencies this morning, but the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has still been able to hold some of the gains it made yesterday amid broad weakness in the Australian Dollar (AUD).

Due to revived US-China trade war fears, GBP/AUD has been able to hold most of its gains since late-April.

However, after touching on a post-EU Referendum high of A$1.88 last week, the interbank rate still shed almost two cents and closed the week closer to the interbank level of A$1.85.

This week’s gains have been more modest so far, but despite the Pound’s weakness today GBP/AUD continues to hold above its opening levels.

The Pound has been unable to keep climbing versus the Australian Dollar due to fresh uncertainties in Brexit and UK politics, but the latest US-China trade tensions and Australian data are keeping the ‘Aussie’ one of this week’s least appealing majors.

Pound (GBP) Exchange Rate Advance Halts as UK Prime Minister Pressured to Drop Negotiations

The Pound (GBP) saw a surprisingly upbeat performance yesterday as some officials from Britain’s opposition Labour Party argued that a cross-party Brexit deal was unlikely to work without being attached to some kind of confirmatory vote.

The hopes were enough to help the Pound to sustain some gains against a weak Australian Dollar (AUD), but said hopes were also short-lived.

This morning, Conservative Party MPs wrote to Prime Minister Theresa May asking her to ditch cross-party negotiations.

This, as well as continued pressure for May to step down, has made investors anxious that there will be months more uncertainty over Brexit and UK politics.

Sterling support was little-affected by this morning’s UK job market report, even though the nation’s key unemployment rate unexpectedly improved to its best rate in 44 years.

Australian Dollar (AUD) Exchange Rates Unappealing amid Trade Jitters and Confidence Data

After months of hopes that wide-ranging trade negotiations between the US and China would end with a deal being secured, trade war fears returned in full force last week.

China reportedly walked back some of its negotiated concessions and the US implemented a fresh escalation of tariffs on US imports of Chinese goods.

This caused broad weakness in trade-sentiment last week, and investors increasingly perceived trade-correlated currencies like the Australian Dollar (AUD) as too risky.

The Australian Dollar was hit particularly hard as China is Australia’s biggest trade partner and the ‘Aussie’ is often used as a proxy for Chinese economic sentiment.

China responded to the fresh tariffs this week by escalating their own tariffs on imports of US goods, leaving investors highly anxious that the trade war was back on even as negotiation between the nations continued.

As a result, the Australian Dollar fell yesterday. Investors were hesitant to buy it today either, even versus a weaker Pound.

The Australian Dollar faced further pressure from this morning’s Australian NAB business confidence report as well, which fell short of expectations.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Investors Highly Anticipate Australian Jobs Report

The Australian Dollar (AUD) remains too unappealing to capitalise on the Pound’s (GBP) Brexit-inspired weakness this week, as the Pound to Australian Dollar (GBP/AUD) exchange rate still trends above the week’s opening levels.

In fact, GBP/AUD may be in for further gains in the coming sessions even if UK political uncertainties persist, as notable upcoming Australian data could influence Reserve Bank of Australia (RBA) interest rate cut bets.

Tomorrow’s Australian data includes Westpac’s May consumer confidence survey, and wage price index data from Q1.

The wage data could be particularly influential, but investors may be hesitant to move much in reaction until Thursday’s highly anticipated Australian job market report from April is published.

As the RBA has said that strength in Australia’s job market is keeping the need for an interest rate cut at bay, a weak job report on Thursday could cause RBA interest rate cuts to surge and the Australian Dollar to plunge.

Of course, any political news involving Brexit or US-China trade developments could also cause Pound to Australian Dollar (GBP/AUD) exchange rate movement in the coming sessions.

Josh Jeffery

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