Pound to Australian Dollar Exchange Rate Advancing Further amid Poor Australian Data
Hopes that next week’s UK General Election will lead to a relatively soft Brexit, as well as sets of highly disappointing Australian data, have made it easier for the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to keep advancing to new highs.
Since opening this week at the level of 1.9123, GBP/AUD briefly tumbled and shed all of last week’s gains.
However, GBP/AUD has been rebounding in solid recovery since Tuesday, and hit new highs as it advanced yesterday. Today, GBP/AUD is still climbing into new highs.
At the time of writing, GBP/AUD is trending near a high of 1.9241. This is the best level for GBP/AUD since the 2016 Brexit Referendum, and unless US-China trade relations notably improve or Australian data improves the Australian Dollar (AUD) is likely to remain weak.
Pound (GBP) Exchange Rates Appealing on Hopes for Orderly Brexit
With just a week to go until Britain’s 2019 General Election, the Pound’s (GBP) movement is increasingly focused on election speculation. With most of that speculation optimistic, the Pound has seen volatile but positive movement.
Even though some polls over the past week have shown the opposition Labour Party gaining on the ruling Conservative Party, most polls still show a strong lead for the Conservatives.
As a result, yesterday saw a strong rise in bets that the election would end with a comfortable Conservative majority. This would make it easier for the Conservatives to pass their relatively soft Brexit plan.
Still, there has not been much fresh polling that supports the market’s newfound confidence in a Conservative win, and analysts warn that the possibility of a surprise outcome remains According to Lee Hardman from MUFG:
‘With the Pound increasingly pricing in a Tory election victory ahead of the event, there is some risk of “buy the rumour sell the fact” price action following the announcement of the election result even if the Tories secure a majority as expected. Pound price action would be much more volatile if the opinion polls were to prove misleading.’
Australian Dollar (AUD) Exchange Rates under Pressure as Data Continues to Disappoint
Earlier in the week, the Australian Dollar was performing strongly in reaction to a less dovish tone than expected from the Reserve Bank of Australia (RBA). However, the Australian Dollar’s appeal has quickly evaporated since then.
On Tuesday, US President Donald Trump indicated that it may be better to leave a US-China trade deal until after the 2020 Presidential Election. While speculation persists that a deal is still close, the high uncertainty is weighing heavily on the trade-correlated ‘Aussie’.
On top of market aversion to trade-correlated currencies, recent Australian data has also been highly disappointing.
Australian growth missed the mark in yesterday’s Q3 growth rate results, and today’s Australian trade and retail stats also fell short.
Australia’s trade balance slipped to A$4.50b in October, due partially to a concerning -5% drop in exports. Retail sales data was even more concerning, coming in at a stagnant 0.0% rather than rising to 0.3% as expected.
The data showed no sign of having been boosted by recent looser policy measures, which may be concerning to the Reserve Bank of Australia (RBA).
Pound to Australian Dollar (GBP/AUD) Exchange Rate to see Bigger Focus on Election Speculation
A week from today, the UK public will head to the polls for the 2019 General Election. This means that Sterling is likely in for a week of major uncertainty, especially if upcoming UK polls show any shifts from expectations.
Sterling volatility is only likely to deepen, so signs of the Conservative Party gaining in the polls could lead to the Pound shooting up, and the opposition Labour Party gaining ground could leave the Pound plummeting.
Election speculation and polling will take big focus over UK data over the next week, but the Australian Dollar could of course influence GBP/AUD movement as well.
Australia’s November construction PMI data will be published tomorrow. If this beats forecasts or if US-China trade relations show signs of improving again, the Australian Dollar could see slightly better support before markets close for the week.
Looking ahead to next week, UK election news and comments from Reserve Bank of Australia (RBA) officials are likely to drive the Pound to Australian Dollar (GBP/AUD) exchange rate.