GBP/AUD Exchange Rate Plummets as Australian Retail Sales Improve
The Pound Australian Dollar (GBP/AUD) exchange rate is down by 0.6% today and is currently trading around AU$1.8500 on the inter-bank market.
The Australian Dollar (AUD) rose against Sterling (GBP) today following better-than-expected Australian trade balance figures for February, which increased to 4,801m against the expected 3,800m.
Andrew Hanlan, an analyst at Wespac, attributed the strengthening in higher prices of commodities such as iron ore, saying:
‘The lift in prices is boosting Australia’s national income, which is flowing through to higher tax revenues – providing governments with additional fiscal flexibility, as evident in recent budget updates.’
These were followed by positive Australian retail sales figures for February, which shot up to 0.8%, exceeding expectations and buoying market confidence in the ‘Aussie’.
Sterling, meanwhile, has remained weakened as Brexit developments have taken another odd turn, with Prime Minister Theresa May due to meet with the opposition leader, Jeremy Corbyn, in an attempt to break the political deadlock over her withdrawal agreement.
GBP/AUD Exchange Rate Falls as May and Corbyn Collaborate to Break Brexit Deadlock
However, the cross-party collaborations which may involve a longer extension of Article 50, have caused a stir within the Conservative party.
Jacob Rees-Mogg, a staunch pro-Brexiteer, has described it as ‘deeply unsatisfactory’ and accused May of collaborating with ‘a known Marxist’.
Nigel Adams, a Junior Minister, for Wales has also resigned over the new developments, saying:
‘It now seems that you and your cabinet have decided that a deal – cooked up with a Marxist who has never once in his political life put British interests first – is better than no deal.’
Today also saw the publication of the UK Markit Services PMI figures for March, which slid into contraction at 48.9.
Duncan Brock, a Group Director at the Chartered Institute of Procurement and Supply, remained gloomy, commenting:
‘A fight for survival beckons if this market stagnation becomes entrenched, the global economy remains downbeat and the Brexit cloud is not lifted.’
AUD/GBP Exchange Rate Rises as US-China Trade Talks Reach ‘End-Game’
The ‘Aussie’ has further benefited from news that its closest trading partner, China, is in the final stretch of trade talks with the US today, which are, as one analyst noted, in their ‘end-game stages’.
Myron Brilliant, an executive Vice-President for International Affairs at the US Chamber of Commerce, said:
‘Ninety percent of the deal is done, but the last 10% is the hardest part, it’s the trickiest part and it will require trade-offs on both sides.’
Today also saw the publication of the Chinese Caixin Services PMI figures for March which increased above expectation at 54.4, further buoying optimism in a recovering Chines economy.
GBP/AUD Forecast: Sterling Could Benefit on Cross-Party Brexit Consensus
‘Aussie’ traders will be awaiting the release of the Australian AiG Performance of Construction Index figures for March tomorrow, and with any signs of improvement this could provide some further uplift for the AUD/GBP exchange rate.
The GBP/AUD exchange rate will be driven by Brexit developments once again, and as May and Corbyn attempt to reach a consensus on Brexit, any indication of a possible long extension to Article 50 granted by the EU would benefit the Pound.