Pound to Australian Dollar Exchange Rate Sheds Much of Last Week’s Gains
While the Pound (GBP) appeared to be holding most of its recent strong gains, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is tumbling today. Fresh signs that UK Prime Minister Boris Johnson could risk a no-deal Brexit have caused fresh Pound losses.
Following last week’s gain of almost two cents from the interbank level of 1.92 to 1.93, GBP/AUD has seen mixed movement this week so far.
Yesterday, GBP/AUD briefly touched on a high of 1.95 – the pair’s best level since the 2016 Brexit Referendum. However, since then investors adjusted lower on the Pound, and today’s news has only led to further Sterling losses.
GBP/AUD has shed much of last week’s losses. The pair trends closer to the level of 1.95 at the time of writing.
Still, the pair’s losses could have been even deeper if not for the Australian Dollar’s (AUD) own weakness today. Reserve Bank of Australia (RBA) news left the ‘Aussie’ weaker.
Pound (GBP) Exchange Rates Tumble as UK Prime Minister Worsens No-Deal Brexit Fears
For much of the past few weeks, the Pound (GBP) has been gaining on hopes that a majority Conservative government would make the chances of a no-deal or hard Brexit less likely.
This was among the primary reasons for Sterling’s strong gains on the election result last week.
As a result though, the latest Brexit news from UK Prime Minister Boris Johnson has only served to hit some of the recent optimism surrounding Sterling.
Reports indicated that Johnson would write into law that Brexit negotiations must end by the end of 2020. This hurt market hopes that Johnson would be willing to take a softer stance on Brexit with his larger majority.
Sterling loses all gains from before GE poll day vs $ and euro as PM decides to legislate against his Government’s room for manoeuvre on extending UK-EU trade talks beyond next year, as an attempt to leverage a quick deal.. raising chance of WTO terms in a year: pic.twitter.com/W5BIfe5dno
— Faisal Islam (@faisalislam) December 17, 2019
This left the Pound tumbling across the board today.
Australian Dollar (AUD) Exchange Rates Weak on Reserve Bank of Australia (RBA) Bets
Despite news of a preliminary US-China trade deal being reached, the Australian Dollar (AUD) has seen mixed movement over the past week.
Continued weakness in Australian ecostats have weighed on Australia’s outlook and kept pressure on the Australian Dollar.
It comes amid concerns that the Reserve Bank of Australia (RBA) could still become more dovish, even with the cautious optimism of RBA Governor Philip Lowe.
Today’s RBA meeting minutes only further flared RBA rate cut speculation. Bank officials indicated that the bank would reassess the country’s economic outlook in February. This was seen as a signal that the bank could cut rates again in February.
According to Valentin Marinov, Head of G10 FX Strategy at Credit Agricole:
‘The Aussie is weaker on the back of the back of the mode dovish than expected RBA minutes,
That said, market expectations of a Phase 1 US-China trade deal could limit the currency’s downside in the near term.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Jitters Likely amid Brexit Anticipation
With UK Prime Minister Boris Johnson expected to attempt to push his Brexit plan through Parliament again over the next week, concerns are quickly rising about reports that he will outlaw further delays in the transition period.
Fears that Britain could end up without a comprehensive EU trade deal at the end of next year have potential to cause Pound (GBP) weakness this week. Any other Brexit developments would also be closely watched by markets.
Upcoming UK data and Bank of England (BoE) news could take a backseat depending on how broad the Brexit concerns become.
Tomorrow will see the publication of UK inflation data, followed by retail sales and the Bank of England’s December policy decision on Thursday. News on BoE Governor Mark Carney’s successor is also expected in the coming days.
As for the Australian Dollar (AUD), Reserve Bank of Australia (RBA) speculation and US-China trade developments could influence the ‘Aussie’ throughout the week.
Key Australian job market stats from November will be published on Thursday and could influence RBA speculation and the Pound to Australian Dollar (GBP/AUD) exchange rate.