GPB/AUD Exchange Rate Plunges as G20 Boosts Risk Appetite for ‘Aussie’
The Pound Australian Dollar (GBP/AUD) exchange rate plummeted over 1.1% today, and is currently trading at AUD$1.7235, with the ‘Aussie’ boosted by increased risk appetite after trade tensions were abated at the G20 summit in Argentina this weekend.
Meanwhile GBP has struggled as Prime Minister Theresa May fights an increasingly fractious Parliament in order to secure support for her Brexit withdrawal agreement ahead of the December 11 vote.
The Pound (GBP) was also hit over the news of increasing concerns over May’s unwillingness to publish the legal advice text of her Brexit agreement, with the opposition Labour Party saying there could be a ‘constitutional crisis’.
Labour’s Brexit Secretary, Sir Keir Starmer, commented:
‘If they don’t produce [the advice] tomorrow then we will start contempt proceedings, this will be a collision course between the Government and Parliament.’
The ‘Aussie’, however, was left unmoved by Sunday’s release of the AiG performance figures for November, which nevertheless showed a significant decrease on October indicating a suffering manufacturing sector.
GBP/AUD Exchange Rate Tumbles as Brexit Withdrawal is Expected to Extend into 2019
The Pound (GBP) tumbled against the ‘Aussie’ today despite the release of Markit’s manufacturing PMIs showing better-than-expected figures and indicating an upturn for the UK manufacturing sector.
However, GBP sentiment continues to suffer from uncertainty from Brexit, with some commentators fearing the withdrawal process may drag on longer than anticipated.
Kari Due-Andresen, an analyst at the bank Handelsbanken, commented:
‘In our eyes, the most likely scenario is that the exit date will be moved to the end of 2019, meaning that the uncertainty surrounding Brexit will not subside.’
This comes on the back of increasing concerns of a Brexit ‘no-deal’ throwing the UK economy into state of turmoil, with any extension only likely to confirm investors’ uncertainty over Sterling.
Tomorrow will see the release of the UK’s construction PMI figures, which are expected to reveal a decline.
AUD/GBP Exchange Rate Soars as Trump and Xi Meet Trade Consensus
The Australian Dollar Pound (AUD/GBP) exchange rate surged after the meeting between US President Donald Trump and China’s Xi Jinping resulted in Trump agreeing to delay his tariffs on $250 billion of Chinese imports.
China returned the favour by increasing agricultural goods imports from the US, providing a huge boost to risk appetite and bolstering appetite for high-yielding risk currencies such as AUD.
As the US-China’s 90-day truce enabled the Australian Dollar (AUD) to surge, the release of worse-than-expected building permit figures for October went relatively unnoticed, despite pointing to a significant decrease in construction.
Tomorrow, however, sees the release of the Reserve Bank of Australia’s interest rate decision, which is expected to remain static at 1.5%.
However, with the recent US-China truce, ‘Aussie’ investors will be watching out for any bullish changes in forward guidance.
GBP/AUD Outlook: Brexit and Australia’s Trade Balance in Focus
The Pound Australian Dollar (GBP/AUD) exchange rate is likely to be driven by political forces this week, as Theresa May rallies to gain support for her Brexit agreement ahead of the December 11 vote.
Tuesday will see the Bank of England’s (BoE), Mark Carney, deliver a speech, with Sterling investors paying close attention to hear if he has any more gloomy forecasts for a ‘no-deal’ Britain.
Wednesday will include the release of the Markit services PMIs for November, which are expected to increase.
AUD could be hit on Thursday, with the release of the trade balance for October, which is likely to show an expected drop of AU$-1,317m.
If this comes to pass we can expect to see the Pound claw back some of its losses against the Australian Dollar.