Pound to Australian Dollar Exchange Rate Struggling as Brexit Fears Persist
A lack of optimistic developments in Brexit, as well as some stronger than forecast Chinese data, is keeping the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate low. Sterling (GBP) has been attempting to rebound, but these movements lack momentum.
Since markets opened this week, GBP/AUD has been trending with an upside bias as some investors buy Sterling from lows. GBP/AUD is struggling to sustain an advance, but is currently trending a little higher in the interbank region of 1.76.
It follows last week’s huge plummet. The Australian Dollar (AUD) capitalised on the Pound’s weakness to push GBP/AUD down almost 7 cents, from 1.82 to 1.75.
Today’s UK job market report had limited impact on Pound. However, the Australian Dollar was influenced by Chinese data and ‘Aussie’ investors are awaiting Australian job stats due Thursday.
Pound (GBP) Exchange Rates Weak as Government Maintains Hard Stance on Brexit
The Pound (GBP) has been unable to recover the losses seen last week, as no-deal Brexit fears continue to dominate the British currency’s outlook.
Yesterday saw the UK government push its controversial plan to undermine the Brexit withdrawal agreement through its first legal hurdle. The bill succeeded despite rising backlash to the plan, due to the government’s big majority.
The Pound has been attempting to recover, but its gains have been limited as the threat of a no-deal Brexit persists.
Sterling found a little support in today’s stronger than expected job market data. However, the details of the job report showed that the outlook for Britain’s job market was far from optimistic.
It's begun. First big unemployment rises coming through official jobs stats. Headline rate rises to 4.1%, but that's average of May to July (includes height of furlough scheme). Look at the single month data – in July alone unemployment rose 0.6% pic.twitter.com/sMsArWOrUU
— Torsten Bell (@TorstenBell) September 15, 2020
Australian Dollar (AUD) Exchange Rates Find Support in Chinese Data
While there has been little notable Australian news this week so far, the Australian Dollar (AUD) still found some fresh support today.
China’s August industrial production and retail sales results were published during today’s Asian session. They came in notably stronger than forecast, bolstering hopes for China’s economy to have been resilient amid the coronavirus pandemic.
According to Lee Hardman, Currency Analyst at MUFG:
‘Overall, the latest monthly activity data provides encouragement that positive cyclical momentum in China will be sustained through the rest of this year,’
[the data was] a supportive development for Asian and commodity-related currencies such as the Australian Dollar.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Remains Focused on Brexit and Data
For the Pound (GBP), developments in the UK government’s Brexit plans remain the biggest market focus. If the UK government is able to push through its controversial plans, no-deal Brexit fears may solidify and the Pound may come under fresh pressure.
On the other hand, any signs that the UK government could soften its position would help the Pound to recover.
Meanwhile, Australian Dollar (AUD) investors remain focused on data. Markets are anxious about how Australia’s key job market has been impacted by the coronavirus pandemic, so Thursday’s job report could be highly influential.
Upcoming UK data, including inflation data tomorrow, could be overlooked however.
If there are no surprising Brexit developments in the coming sessions, Pound investors will likely turn attention towards the Bank of England (BoE). The BoE will hold its September policy decision on Thursday.
If the BoE ramps up dovish rhetoric on Brexit or coronavirus fears, the Pound to Australian Dollar (GBP/AUD) exchange rate could be in for deeper losses.