GBP/AUD Exchange Rate Sinks despite Fears that Australia’s RBA Will Cut Interest Rates
The Pound Australian Dollar (GBP/AUD) exchange rate is down by 0.3% and trading around AU$1.8582 on the inter-bank market.
The Australian Dollar (AUD) gained against the weakened Sterling (GBP) today despite the risk-sensitive AUD struggling as Asian Pacific stocks slump as key market indicator hit an ‘amber warning’ following concerns that the US economy may be heading for a recession.
This came after last week’s announcement from the US Federal Reserve that there would be no rate hikes for 2019.
Many ‘Aussie’ investors are remaining cautious as falling bond yields as indicative of the Reserve Bank of Australia (RBA) having to cut its rates at least twice this year.
Tano Pelosi, a Portfolio Manager at Sydney’s Antares Capital, commented:
‘If the Reserve Bank of Australia is slow to cut or respond to global headwinds, then we can see Australia’s yield curve flattening dramatically. It will suggest the RBA is behind the curve.’
The Pound (GBP) has fallen against many of its competitors after Prime Minister Theresa May has come under increasing pressure from MPs to set a date for her resignation.
Sterling traders are becoming increasingly jittery over fears that this week’s critical Parliamentary vote will not go ahead, as May has commented that the vote would only proceed if she gains ‘sufficient support’.
GBP/AUD Exchange Rate Falls as May’s Leadership is Called into Question over Brexit Deal
Katie Perrior, Theresa May’s former Director of Communications, commented on May’s position, saying:
‘Maybe it’s time to stop finding scapegoats and admit that Theresa May and her lack of leadership has made a bad situation worse. With great sadness, it’s time for her to swap her departure date in return for the deal. It’s the least she can do.’
With increasing concerns over a possible General Election tied with increasingly diminishing hopes over the third ‘meaningful vote’ which may – or may not – go-ahead this week, this is causing many Sterling traders to remain cautious.
Today also saw Daniel Ferrie, the press spokesman for Michel Barnier, the EU’s Chief Brexit negotiator, tweet a telling comment in the European Commission’s new letter:
“While the European Union ?? continues to hope that it will not be the case, if the Withdrawal Agreement is not ratified by Friday 29 March, a “no-deal” scenario may occur on 12 April.”
— Daniel Ferrie ?? (@DanielFerrie) March 25, 2019
GBP/AUD Forecast: Sterling Could Plummet on Heightened No-Deal Odds
Pound traders will be looking ahead to the publication of the UK BBA mortgage approvals figures for February which are due out tomorrow. With any signs of an improvement, this could provide some relief for Sterling.
‘Aussie’ traders, meanwhile, will be looking ahead to Wednesday which will see the RBA’s Assistant Governor, Christopher Kent, deliver a speech, and with all eyes being on the RBA’s possible interest rate cuts this week, any indications that this will go ahead could see the AUD/GBP exchange rate fall.
The GBP/AUD exchange rate will, however, remain directed by Brexit developments this week. Any signs that a no-deal Brexit could increase would see the Pound plummet further.