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Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as Australian Consumers ‘Cautiously Optimistic’

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GBP/AUD Exchange Rate Falls as Australian Consumer Confidence Rises

The Pound Australian Dollar (GBP/AUD) exchange rate is down today and is currently trading around $1.8108 on the inter-bank market.

The Australian Dollar (AUD) benefited today following promising figures from the Westpac Consumer Confidence index for February, which rose above expectations by 4.3%.

Matthew Hassan, a Senior Economist at Westpac commented:

‘Sentiment has recovered after a shaky start to the year… The February lift takes the Index back into ‘cautiously optimistic’ territory.’

This optimism, however, was clipped by yesterday’s publication of Australian home loans figures for December, which fell well below expectation by -6.1%.

The Pound, meanwhile, was hit by disappointing year-on-year UK CPI figures for January today, which fell to a worse-than-expected 1.8%.

These were also followed by the publication of the UK retail price index figures for January, which also fell below expectation by -0.9% – further dampening market confidence in Sterling.

AUD/GBP Exchange Rate Rises on Report of US-China Trade Talks Extension

The ‘Aussie’ has also benefited today over renewed optimism relating to US-China trade discussions, after US President Donald Trump suggested he could potentially extend the 1 March ‘trade truce’ deadline.

Donald Trump said:

‘If we’re close to a deal where we think we can make a real deal and it’s going to get done, I could see myself letting that slide for a little while.’

AUD benefited against Sterling as investors took a generally risk-on tone on the news that the US and China could once again engage in constructive trade talks.

The Australian economy is heavily reliant on China, and this news has benefited the AUD/GBP exchange rate.

David de Garis, an Economist at the National Australia Bank, said:

‘White House press advisor Kellyanne Conway told Fox News that Trump ‘wants to meet with President Xi very soon’ while Trump added at a campaign rally that ‘we don’t want China to have a hard time’.’

Pound Australian Dollar (GBP/AUD) Exchange Rate Struggles as Brexit Rumours Send Mixed Signals

Meanwhile in Brexit news, UK Prime Minister Theresa May is facing increasing pressure after her chief Brexit negotiator, Olly Robbins, was head in Brussels discussing a possible extension to Article 50 if her deal is rejected.

Stephen Barclay, the Brexit Secretary, hit back at these rumours, saying:

‘The prime minister has been very clear that we are committed to leaving on the 29th of March… It’s not in anyone’s interest to have an extension without any clarity.’

This has buoyed some GDP traders’ confidence, as any signs of an extension increases the possibility of a deal being settled between the EU and the UK.

GBP/AUD Forecast: Hints of a Brexit Extension Could See Pound Benefit

‘Aussie’ traders will be looking ahead to the publication of Australia’s consumer inflation expectations figure for February tomorrow, with any signs of an increase potentially buoying the AUD/GBP exchange rate.

Tomorrow will also see a raft of Chinese data releases, with AUD investors paying particular note to China’s trade balance figures for any signs of recovery in its struggling economy.

GBP investors, meanwhile, will be looking ahead to tomorrow’s printing of the RICS housing price balance figures for January, which are expected to decrease.

The GBP/AUD exchange rate is likely to be directed by ongoing Brexit developments this week, with any further signs of an extension to the Brexit process likely to see Sterling rise.

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