Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Failed to Capitalise on Weaker Australian Confidence
A sharp dip in the ANZ Roy Morgan weekly consumer confidence index was not enough to boost the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate.
While sentiment within the Australian economy softened sharply on the week the downside bias of the Australian Dollar (AUD) remained limited on Tuesday morning.
With global geopolitical tensions easing slightly this encouraged AUD exchange rates to recover some ground in the early week.
Political worries weighed on Pound Sterling (GBP), meanwhile, thanks to persistent market jitters over the continued uncertainty surrounding Brexit.
As progress towards an agreement on the key Irish border issue remained elusive this kept the GBP/AUD exchange rate under pressure.
Brexit Uncertainties Limit GBP/AUD Exchange Rate Outlook
With fresh UK data somewhat thin on the ground over the coming days the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate may struggle to find any particular support.
Investors are unlikely to see any particular reason to buy into Pound Sterling unless there are signs that the UK and EU are moving closer to a substantial agreement on the main Brexit issues.
However, with no real compromise yet found on the subject of the Irish border GBP exchange rates could remain on a weaker footing ahead of June’s critical EU summit.
As Catherine Stephan, research analyst at BNP Paribas, noted:
‘The agreements that have been reached so far are still vague concerning such major issues as the handling of Northern Ireland.
‘Under this environment, it is hard to predict the most likely Brexit scenario. Moreover, as time passes without any concrete progress, it only reduces the probability that an overall agreement will be reached that is satisfactory for all parties.’
A sharp pick up in net consumer credit could also weigh on Pound Sterling this week, with an increased reliance on consumer debt likely to discourage Bank of England (BoE) policymakers.
Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Gains Forecast on Weaker Building Approvals
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate could benefit from a weaker Australian building approvals figure.
After March’s strong surge in approvals forecasts point towards a slightly softer figure, something which could undermine the appeal of the Australian Dollar in the short term.
Focus will also fall on the latest Australian private sector credit and private capital expenditure data.
If the latest data shows evidence of an improvement in sentiment within the Australian economy this should help to boost AUD exchange rates further.
On the other hand, any increase in market risk aversion could weigh heavily on the commodity-correlated Australian Dollar.
There is still a threat that the Trump administration’s more protectionist policy outlook could weaken the global economy, to the detriment of AUD exchange rates.
As long as signs continue to point towards the Federal Reserve raising interest rates at a more aggressive pace the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate should find some support.