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Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as Brexit Uncertainty Plagues UK Construction Sector

Pound Australian Dollar (GBP/AUD) Exchange Rate Flat as Brexit Uncertainty Looms Over UK Construction

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of AU$1.8588.

The UK construction PMI rose for the first time since January, edging up to 50.5 in April from 49.7 in March.

The rise was aided by house building which was reported to be the strongest performing area.

However, commercial work remained weak likely due to Brexit uncertainty and construction companies revealed that there was a modest decline in total new orders.

Commenting on this, Associate Director at IHS Markit, Tim Moore said:

‘A return to growth would normally be considered a positive move for the UK construction sector, but the weakness outside the house building gives more than a little pause for thought. Commercial activity and civil engineering both remained on a downward path in April as political uncertainty led to delays with spending decisions.

‘The forward-looking survey indicators remain subdued, with the UK construction sector recording a drop in business optimism during April and the largest fall in new work for over one year. A lack of new work has started to impact on staff recruitment, as signalled by a reduction in payroll numbers for the first time since July 2016. This provides another signal that construction firms are bracing for an extended period of soft demand ahead.’

Australian Dollar (AUD) Muted as Australian New Home Sales Stabilises

Data released early on Thursday revealed that Australian new home sales have stabilised.

According to Australia’s Housing Industry Association (HIA) sales fell by 0.1% in March, holding near the lowest level in over five years

However, the slowdown last year which saw sales slide by 8.5% isn’t getting any worse at this point.

As a number of housing market indicators have started to improve, it is likely welcome news for the residential construction sector.

This also hints towards the impact of tighter lending standards may be starting to ease.

Commenting on this, Senior Economist at the HIA, Geordan Murray said:

‘The credit squeeze impacted the market at a time when the natural housing cycle was already beginning to cool. Banks reduced the amount of money they were willing to lend and the time it took to get a loan approved blew out.

‘The market is now showing signs of adjusting to the new levels of lending.’

Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Rise on a Hawkish BoE?

This afternoon, the Pound (GBP) could rise against the Australian Dollar (AUD) following the Bank of England’s (BoE) interest rate decision and monetary policy minutes.

If the minutes indicate the BoE has taken a more hawkish approach as March’s risk of a ‘no-deal’ Brexit has been avoided, Sterling could rise.

Meanwhile, on Friday the ‘Aussie’ could rise against Sterling following the release of the Australian building permits.

If the amount of permits granted rises in March, the Pound Australian Dollar (GBP/AUD) exchange rate could edge down.