Pound Australian Dollar movement has been dominated by Article 50 news recently; with a Parliamentary recess now in place, speculation about the next stage of Brexit is likely remain in focus for investors.
Global Currency Concerns Leave Pound Sterling More Attractive than Australian Dollar
The Pound has risen slightly against the Australian Dollar today, though this is largely due to concerns about other major currencies driving up demand for the comparatively safe Sterling.
The latest UK news has come from the House of Commons, where MPs have approved the Article 50 bill for a second time without any amendments.
The bill will now be passed on to the House of Lords, though, as a preliminary warning, one Government source has intimated that the Lords could be disbanded if it seeks to oppose the key Brexit legislation.
Australian data has shown an alarming slowdown in HIA new home sales in December, down to 0.2% from a previous 6.1%.
Elsewhere, Reserve Bank of Australia (RBA) Governor Philip Lowe has spoken out against increasingly protectionist attitudes sweeping across the world; this could inflame tensions between Australia and one of the most high-profile advocates of protectionism, US President Donald Trump.
Pound Sterling Slump Expected if Article 50 Bill is Finalised without Amendment
The next Pound-influencing event will come from the House of Lords, when peers are expected to vote on the Article 50 bill around February 20th, when Parliamentary recess ends.
As with the previous Commons debates, peers are expected to debate the bill and propose amendments, though it remains to be seen if these will have any more success than those offered in the Commons.
If no changes are made to the bill before it is approved, the Pound is likely to plummet against the Australian Dollar, given that it will essentially give the Government unrestricted choice in deciding how the UK leaves the EU, to a potentially damaging level.
Australian Dollar Forecast to Rise if RBA Hikes Interest Rates in 2017
Looking at long-term movement for the Australian Dollar, signs that a Reserve Bank of Australia (RBA) rate hike is incoming, as well as an actual hike, would likely boost AUD GBP considerably.
Offering his outlook based on the latest RBA rate freeze and comments, former RBA official Professor Warwick McKibbin has forecast that;
‘Growth is rising, the RBA is forecasting 3% growth, inflation is rising even though it is below the band and the world economy is picking up. With the Trump stimulus package, if it does go ahead, in the near term at least, stronger growth and demand for the resources we produce [will require a late 2017 rate hike].
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.64 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.60.
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