GBP/AUD Exchange Rate Flat as Brexit Uncertainty Grows
The Pound Australian Dollar (GBP/AUD) exchange rate is steady today as rising Brexit uncertainty is offset by some gloomy Australian confidence figures.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.7946, leaving the pairing virtually unchanged from this morning’s opening rate.
Pound (GBP) Tumbles on Rising No-Deal Brexit Fears
While the Pound (GBP) is holding its ground against the Australian Dollar (AUD), Sterling has slumped in wider trade amidst fears that the risks of a no-deal Brexit are on the rise.
This comes as Boris Johnson, frontrunner to become the next PM reaffirmed his commitment to leaving the EU in October, with or without a deal.
However some analysts believe that currency markets may even be underestimating the risks that a no-deal Brexit poses to Sterling.
Rupert Harrison, portfolio manager at BlackRock suggests:
‘It’s even more uncertain than it has been at any point in the process.
‘You can imagine a very, very wide range of outcomes in the next 12 months, and currently the options markets in currencies are not reflecting the scale of that potential volatility.’
Australian Dollar (AUD) Weakened by Gloomy Business Sentiment Figures
Meanwhile, the Australian Dollar (AUD) has been unable to take advantage of the Pound’s (GBP) weakness today, following the release of Australia’s latest business confidence figures.
According to National Australia Bank’s, domestic business sentiment fell last month, with NAB’s confidence index slumping from 7 to 2, despite the Reserve Bank of Australia (RBA) cutting rates to a record low.
Commenting on the data, Alan Oster Chief Economist at NAB, said:
‘Overall, the survey results for June continue to suggest that the business sector has lost significant momentum over the past year or so.’
On top of this Oster also suggested that this points to a slowdown in growth in the second quarter, further limiting the appeal of the ‘Aussie’ on Tuesday.
GBP/AUD Exchange Rate Forecast: Will an Uptick in UK GDP Offer Support to Sterling?
Looking ahead, movement in the Pound Australian Dollar (GBP/AUD) exchange rate tomorrow is likely to be driven by the release of the UK’s latest monthly GDP release.
Following a contraction in April, Economists forecast that May will have seen a return to growth, potentially providing some relief to GBP exchange rates.
However, with a dramatic jump in growth this is unlikely to be enough to enough to avoid the UK contracting in the second quarter, something that is likely to limit any upside in Sterling.
In the meantime, the Australian Dollar could face pressure overnight, with the publication of Australia’s latest consumer confidence figures, with analysts expecting household sentiment to have weakened in July.