Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Sustains Rebound amid Poor Australian Business Confidence

Pound to Australian Dollar Exchange Rate Climbed Yesterday despite Australian Dollar Strength

When markets opened for the week yesterday, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate briefly dipped as the Australian Dollar (AUD) jumped on domestic news and risk-sentiment. However, the Pound (GBP) then saw solid gains and pushed the pair higher.

Due to higher market demand for trade-correlated currencies, GBP/AUD fell last week from the interbank level of 1.80 to 1.79.

While GBP/AUD continues to trend in the region of 1.79, it has rebounded strongly from yesterday’s low of 1.78 and is trending higher on the week’s opening levels.

The Pound has been able to more easily hold yesterday’s gains against the ‘Aussie’ due to poor Australian data, but if Brexit fears worsen then the pair could shed some of its gains.

Pound (GBP) Exchange Rates Surge as UK Recession Fears Ease and No-Deal Brexit Appears Blocked for Now

Despite insistence from UK Prime Minister Boris Johnson that he would not be seeking another extension to Brexit, the Pound (GBP) has seen stronger demand since yesterday.

Investors are hopeful that the new law to prevent the government from seeking a no-deal Brexit would ultimately be effective, and yesterday’s UK data offered the Pound some fresh domestic support.

Britain’s July Gross Domestic Product (GDP) growth rate data beat forecasts in every notable print, bolstering hopes that Britain would avoid an imminent recession.

As a possible recession had been among the major fears of Pound investors lately, yesterday’s data offsetting recession concerns led to a strong jump in Pound demand. This morning’s UK job market report beat expectations in many prints as well, further supporting the British currency.

Political uncertainties continue to dominate the Pound outlook overall though, making it more difficult for the currency to hold its best levels.

Australian Dollar (AUD) Exchange Rates Weaker as Australian Business Confidence Misses the Mark

The Pound to Australian Dollar (GBP/AUD) exchange rate was able to sustain most of yesterday’s UK data-inspired gains in part thanks to this morning’s weaker than forecast Australian data.

After a decent figure of 4 last month, NAB’s Australian business confidence stat fell to just 1 in August, below the result of 3 that some analysts forecast.

Despite last week’s hopes that the Reserve Bank of Australia (RBA) would avoid taking a more dovish stance on Australian monetary policy soon, this latest data caused some analysts to speculate that the bank could be pressured into more easing after all.

According to Kaixin Owyong from NAB, the data:

‘suggest a continued loss of momentum in private demand and no sign of the rebound in activity anticipated by the Reserve Bank.’

It left the Australian Dollar (AUD) weaker today, after strong Australian housing data and hopes for softening global political jitters offered the risk-correlated currency some support yesterday.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Focused on UK Politics and Risk-Sentiment

With most of the week’s UK and Australian economic calendars looking quiet, the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to be driven by UK political developments as well as shifts in global risk-sentiment.

UK Parliament has been prorogued and will stay shut until mid-October, but any other political developments that occur regarding the government or Brexit will still be highly influential for the Pound (GBP).

The trade-correlated Australian Dollar (AUD), on the other hand, has been driven a lot by developments in US-China trade relations lately and this is set to continue.

Any surprising developments in the trade war, as well as other shifts in market risk-sentiment, will drive AUD movement.

Tomorrow’s Australian consumer confidence report from Westpac could also influence the Pound to Australian Dollar (GBP/AUD) exchange rate.

Josh Jeffery

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