Pound Australian Dollar (GBP/AUD) Exchange Rate Slides despite Unexpected Fall in Aussie Construction
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate continued to slide and the pairing is currently trading at an inter-bank rate of AU$1.8370.
The value of Australian construction work unexpectedly fell in the three months leading to March.
This was the third consecutive slide, with the weakness in the sector being broad-based.
It was revealed by the Australian Bureau of Statistics (ABS) that the value of construction work fell by -1.9%.
Compared to Q1 2018, the value of construction fell by 6%.
However, this could do little to overshadow the Brexit pessimism that battered Sterling on Wednesday.
Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as UK Real Wage Growth Slows
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slipped today and the pairing is currently trading at an inter-bank rate of AU$1.8382.
This morning, the Office for National Statistics (ONS) revealed that UK inflation rose to the highest rate this year.
April’s Consumer Price Index (CPI) rose by an annual rate of 2.1%, meaning inflation had surpassed the Bank of England’s (BoE) 2% target.
Electricity and gas prices were the largest driver of inflation in the UK as consumers were hit by a 10% increase in electricity costs.
However, the jump in inflation was lower than forecast which likely dampened sentiment in the Pound.
Added to this, the rise in inflation now means that real wage growth in the UK has slowed to 1.2%.
Sterling (GBP) Slides as MPs Criticise PM’s New Brexit Deal
On Wednesday the Pound was battered by further Brexit uncertainty as Theresa May presented her last-ditch Brexit Withdrawal Agreement.
May has failed to win the support of lawmakers despite the new deal including a vote on a second referendum and a compromise on customs arrangements.
Shadow Brexit Secretary, Keir Starmer stated that the offer was ‘too weak’, and this lack of support from MPs on both sides dampened sentiment in Sterling.
Reports have also suggested that some senior Conservative MPs have upped their efforts to remove May from her position.
However, the 1922 Committee has previously refused to change rules on a no-confidence vote.
Australian Dollar (AUD) Rises despite Dovish RBA
On Tuesday Reserve Bank of Australia (RBA) Governor Philip Lowe stated that the central bank would ‘consider the case for lower rates’ during its June meeting.
This was the clearest signal so far that the RBA will cut interest rates, and caused the Commonwealth Bank to predict that there will be a near-term RBA rate cut.
Although this hit the Australian Dollar, the ‘Aussie’ was still able to rise as the Pound was battered by Brexit pessimism.
Pound Australian Dollar Outlook: Will Disappointing UK Retail Sales Dampen GBP?
Due to a lack of significant economic data releases it is likely the Australian Dollar (AUD) will rise against the Pound (GBP) if US-China trade talks resume.
If the US responds to Beijing’s comment that they have not shut the door on trade talks, risk-appetite could rise, buoying the ‘Aussie’.
Looking ahead to Friday, the Pound could slide following the release of April’s UK retail sales data.
If data shows that retail sales slid further than forecast, the Pound Australian Dollar (GBP/AUD) exchange rate could fall.