Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Benefits as Westpac Consumer Confidence Falls
A surprise decline in the Westpac consumer confidence index helped the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate extend its bullish run further on Wednesday morning.
As confidence fell -0.6% on the month in June this added to existing worries over the strength of the economic outlook, keeping the Australian Dollar (AUD) on the back foot.
Although the Chinese consumer price index strengthened as forecast this was not enough to shore up AUD exchange rates in the face of the underwhelming Australian data.
Persistent market jitters over the prospect of a further deterioration in US-China trade relations continued to limit investors’ incentive to buy into the Australian Dollar, meanwhile.
Brexit Speculation Continues to Drive Pound Sterling (GBP) Movement
The uncertainty surrounding Brexit and the outcome of the Conservative leadership contest failed to weigh on Pound Sterling (GBP), on the other hand.
Market hopes that the UK could still avoid leaving the EU without a deal supported GBP exchange rates, even though the leadership candidates are split in their opinion on the current Brexit deadline.
After Labour Party MPs tabled a cross-party motion aimed at preventing a no-deal Brexit investors found some cause for confidence, even though it remains to be seen whether enough support for the motion will materialise.
Comments from Bank of England (BoE) Governor Mark Carney could offer the GBP/AUD exchange rate an extra boost heading into the weekend.
If Carney continues to indicate a willingness to raise interest rates in the coming months the appeal of the Pound is likely to pick up.
However, any indication that weakening UK wage growth has diminished the hawkishness of BoE policymakers may weigh heavily on GBP exchange rates.
A weaker showing from May’s RICS house price index could equally limit demand for Pound Sterling, highlighting the continued sluggishness of the domestic economy.
Tightening Labour Market to Offer Australian Dollar (AUD) Boost
Thursday’s Australian labour market data may encourage AUD exchange rates to recover some of their recent losses, however.
Forecasts point towards the headline unemployment rate improving from 5.2% to 5.1%, offering some relief to Reserve Bank of Australia (RBA) policymakers who have expressed concern over a lack of labour market tightening.
Evidence that unemployment is falling could reduce the odds of the RBA cutting interest rates in the near future, given the importance that policymakers have placed on the employment outlook.
A disappointing showing from the report, though, may encourage the GBP/AUD exchange rate to extend its uptrend further.
Focus will also fall on June’s consumer inflation expectation survey, with markets anticipating signs of a sharp increase in price pressures.
As long as Australian data shows signs of resilience this should help the Australian Dollar to steady, even if global trade tensions continue to escalate.