Pound to Australian Dollar (GBP/AUD) Exchange Rate Volatile amid 2020 Growth and Trade Hopes

Pound to Australian Dollar Exchange Rate Struggles to Advance amid Risk-Sentiment

Following significant losses in the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate earlier in the month, the pair’s movement has steadied since last week. Both currencies currently lack drive as investors adjust 2020 growth and trade outlooks.

Last week, GBP/AUD slipped from the interbank region of 1.88 to close the week near the level of 1.87. GBP/AUD briefly dipped into a monthly low of 1.86 but recovered before the end of the week.

This week so far, GBP/AUD continues to trend within the interbank region of 1.87.

Both the Pound (GBP) and Australian Dollar (AUD) are seeing mixed movement. Investors are hesitant to buy Sterling too much as Brexit uncertainties dominate the outlook, while Reserve Bank of Australia (RBA) speculation weighs on the ‘Aussie’.

Pound (GBP) Exchange Rates Supported by Solid Mortgage Data

The Pound’s (GBP) movement has been ultimately limited over the past week.

Concerns that 2020 will be filled with Brexit uncertainty, combined with a lack of fresh support for the British currency, have made investors hesitant to buy the Pound much.

However, as the government intends to reach a Brexit deal over the next year, the currency’s losses are limited as well.

Today, the Pound found some modest support from the latest mortgage approvals stats. Mortgages jumped despite Brexit and election uncertainty. Andrew Montlake, Managing Director at UK Mortgage Broker Coreco, said:

‘For a lot of British households, November was a classic case of better the devil you know.

They chose to get their houses in order and secure a mortgage before a potentially disruptive election result.’

Australian Dollar (AUD) Exchange Rates Hold Steady amid Market Risk-Sentiment

The risk and trade-correlated Australian Dollar (AUD) has seen relatively strong movement in recent weeks, despite poor Australian data and concerns that the Reserve Bank of Australia (RBA) could take a more dovish stance on Australian monetary policy.

This is because of rising hopes for US-China trade relations, as well as rising hopes for the global economy to improve in the coming year.

The US and China are expected to hold a ceremony to sign ‘phase one’ of a trade deal, and the pomp around the deal is boosting hopes that relations will continue to improve.

As the Australian Dollar is correlated to trade, this has kept the ‘Aussie’ sturdy even amid RBA rate cut speculation.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Investors Await Manufacturing Stats

Brexit and US-China trade developments will remain in focus and will continue to drive both risk-sentiment and the Pound to Australian Dollar (GBP/AUD) exchange rate.

However, unless there are notable developments in these geopolitical issues in the coming sessions, investors may be more likely to react to the data due to be published in the New Year.

Relatively quiet market activity is to be expected until Thursday, when major markets and data publications will return from the festive period.

Thursday’s Asian session will see the publication of Australia’s final CommBank manufacturing PMI. It will be followed during the European session by Markit’s UK manufacturing PMI.

If Australian manufacturing beats projections, the Pound to Australian Dollar (GBP/AUD) exchange rate could see losses as Reserve Bank of Australia (RBA) interest rate cut speculation could be doused.

Josh Jeffery

Contact Josh Jeffery