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Pound to Australian Dollar (GBP/AUD) Exchange Rate: All Eyes on Reserve Bank of Australia (RBA)

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Pound to Australian Dollar Currency Rate Could See Fresh Pressure on Australian News

While the Pound (GBP) performed well against many major currency rivals this week, the Pound to Australian Dollar (GBP/AUD) exchange rate has struggled to hold its ground due to strong demand for the Australian Dollar (AUD).

GBP/AUD recovered from yesterday’s half-month-worst of 1.8654, but is still on track to slip just slightly from this week’s opening levels of 1.8802. At the time of writing on Friday, GBP/AUD is trending near the level of 1.8779.

The Pound to Australian Dollar exchange rate could advance again by the end of the day if there are any optimistic Brexit developments or surprising US-China trade developments.

Overall though, investors will be awaiting next week’s news, including key Australian data and the Reserve Bank of Australia’s (RBA) anticipated November policy decision.

Pound (GBP) Exchange Rates Limited by Political and Economic Uncertainty

The Pound may have seen one of its best months in a decade, trending high against other major currencies like the US Dollar (USD), but resilience in the Australian Dollar has meant GBP/AUD appeal has been limited in recent weeks.

GBP Investors have remained fairly hesitant to buy the Pound following last week’s slide, as markets gear up for a December General Election.

Expectations for a month of political and Brexit uncertainty while UK political parties campaign, is keeping pressure on the Pound.

Sterling has failed to find much support from the latest UK data either, with today’s manufacturing PMI from Markit beating predictions to come in at a narrow contraction of 49.6 rather than the expected 48.1.

However, this was partially due to preparation for Brexit on the 31st of October. Now that Brexit has been delayed, there are concerns that things remain gloomy. According to Rob Dobson, Director at IHS Markit:

‘the underlying picture looks even darker than even these disappointing headline numbers suggest, as output and new orders fell despite short-term boosts from stock-building activity in advance of the October 31st Brexit deadline, which included a rise in exports as clients in the EU sought to mitigate supply risk.’

Australian Dollar (AUD) Exchange Rates Benefit from Economic Hopes Despite Trade War Jitters

The Australian Dollar experienced another fairly optimistic week, despite fresh concerns for the future of US-China trade relations.

A combination of stronger than expected Australian data, as well as an uncertain tone from the Federal Reserve, have narrowed perceived monetary policy divergence between the Reserve Bank of Australia (RBA) and the Fed.

As Reserve Bank of Australia interest rate cut bets lighten and Fed easing speculation persists, the Australian Dollar has been registering strong gains against the US Dollar (USD).

On top of central bank speculation, the ‘Aussie’ benefitted from a stronger than expected Chinese manufacturing PMI today.

As China is Australia’s biggest trade partner, higher manufacturing has helped Australia’s outlook even as fears that the US and China may not be able to reach a trade deal persist.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Investors Look Ahead as Reserve Bank of Australia Meets Tuesday

With just over a month until Britain’s 2019 General Election is held on the 12th of December, the Pound’s movement may be in for a month of volatility.

Next week’s upcoming UK data includes a construction and services PMI from October, and the Bank of England (BoE) will also hold its November policy decision on Thursday.

However, amid political and Brexit uncertainty, the Pound’s potential for movement could be limited as markets focus on election campaigns and polls offering majority predictions.

As Sterling movement may be limited, the Australian Dollar is more likely to take point in GBP/AUD movement in the coming week due to an anticipated slew of major Australian news and data.

The week’s biggest news will be Tuesday’s Reserve Bank of Australia (RBA) policy decision. If the bank avoids a dovish tone on Australia’s economy as speculated, the Australian Dollar could firm.

Other Australian data, including retail sales services PMI and trade balance data, could also influence the Pound to Australian Dollar (GBP/AUD) exchange rate throughout the next week.