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Anthony from Moneycorp

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  1. Boosted by an alleviation of Brexit no-deal fears, the Pound Sterling (GBP/£) remained stronger against a basket of peers into Wednesday’s session. Against the Australian Dollar (AUD), the GBP gained 0.93% on Tuesday, extending that by another 0.37% during Wednesday trading so far to hit a joint four-month best of $1.85221. The GBP was lifted following a parliamentary session in the UK in which the PM announced a series of votes which give MPs the opportunity to direct the course of Brexit with the PM’s deal; no-deal and a Brexit delay all available options. Meanwhile the risk-sensitive Aussie was weighed amid India-Pakistan military aggression raising the prospect of regional tension. Societe Generale director, Kyosuke Suzuki, wrote “So far market reaction in major currencies has been relatively limited as tensions between the two countries had already been high. Focus is on whether the conflict shows signs of escalating.” Wednesday will see UK lawmakers convene to participate in indicative Brexit votes, however given the new timeline these are of limited importance - if the PM is to be trusted on her offer of binding votes commencing March 12th.
  2. The Pound to Australian Dollar (GBP/AUD) exchange rate remained flat through the first half of Monday’s session, holding steady at around AU$1.8068 amid renewed US-China Trade optimism. Hopes of a Breakthrough in talks appeared to be driven by a tweet from US President Donald Trump as he spoke of ‘Big progress’ following the latest round of talks. While this helped to support the ‘Aussie’ it was ultimately offset by some mixed Chinese data, which left AUD to remain flat against Sterling.
  3. The Pound Sterling (GBP/£) remained on a bullish footing against the Euro (EUR/€) in the wake of the early session UK retail sales figures release which saw consumer spending rebound and print an above-forecast month-on-month change of 1.0%. At the time of writing, the Pound-to-Euro (GBPEUR) exchange rate was last seen at €1.1365, up 0.28% from the session open. Despite the positive retail release, ING’s developed markets economist, James Smith maintains a sceptical outlook on any momentum building within the sector as Brexit uncertainty persists. Smith wrote “Despite an improvement in disposable incomes, the outlook for the high street remains clouded by the near-term uncertainty surrounding a ‘no deal’ Brexit.” Smith added his expectation that consumer spending would likely be capped over the coming months with consumer confidence figures suggesting the outlook remains at its gloomiest perceived level since 2013. “There is a risk that, as the Brexit deadline draws nearer, nervousness about the impact of ‘no deal’ will creep into the consumer mindset. At the very least, shoppers may opt against bigger ticket purchases in the short-term, instead choosing to maintain savings levels,“ Smith said.
  4. The Pound-to-Australian-Dollar exchange rates declined into Wednesday’s session and was last seen trading at AU$1.812 to the £1. Interestingly, the sharpest drop for the Sterling-Aussie x-rate occurred in line with the Reserve Bank of New Zealand (RBNZ) releases which saw the Kiwi boosted sharply, suggestive of a by-proxy, positive, impact on the Aussie Dollar. On the data front, UK headline and core CPI figures are due (0930 GMT) alongside the latest house price index (HPI) and producer price index (PPI) releases. The Australian Dollar was also supported by rising optimism with regards to a US-China trade deal as top-tier US officials prepare for the next round of high-stakes trade talks in Beijing. While initially firm on the March 1st ceasefire deadline, Tuesday saw President Trump soften his stance, suggesting an extension to the ceasefire could in the offing should a deal not be secured by the end of the month.
  5. The Pound to Australian Dollar (GBP/AUD) struck a low of AU$ 1.7973 on Tuesday morning after the UK’s Services PMI came in well below expectations. Markit reported that the UK’s dominant service sector narrowly avoided stagnation last month, with activity falling to its lowest levels in over two years as Brexit uncertainty continues to drag on the UK economy. UPDATE: The Pound Sterling (GBP) appreciated further against the Australian Dollar (AUD) following weaker-than-forecast Australian retail sales data, printing a month-on-month decline of 0.4% in contrast to a 0.0% forecast. GBP gains were rapidly reversed however in the wake of the Reserve Bank of Australia’s (RBA) releases which while maintaining rates at record lows didn’t sound as dovish as investors expected.
  6. Fresh Brexit Uncertainty Weighs Heavily on Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate As Conservative MPs voted in favour of throwing out Theresa May’s withdrawal agreement in order to reopen discussions on the Irish backstop the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate tanked. With the EU having already ruled out any renegotiation of the withdrawal agreement, unless the UK’s red lines change, this move left Pound Sterling (GBP) under pressure.
  7. The Pound to Australian Dollar (GBP/AUD) exchange rate dipped to AU$1.8325 on Monday afternoon ahead of crucial US-China trade talks taking place later in the week. Meanwhile Sterling found itself on the back foot at the start of the session as markets braces for Tuesday’s parliamentary debate on Theresa May’s Brexit Plan B.
  8. Despite the path for the UK’s divorce from the EU remaining unclear, the Pound has been increasing in value quite substantially over the past week or so, with the GBP to AUD exchange rate jumping by an impressive 7-cents in just the past two weeks. The gains can be put down to both Sterling strength, as well as Aussie Dollar weakness. Sterling has climbed in value across the board of major currency pairs since the UK’s Prime Minister Theresa May lost the vote on her deal. Financial markets appear to have digested the recent impasse in negotiations as an opportunity to extend Article 50, and therefore allow the UK to continue trading with the EU under the current agreements. The potential of an extension to Article 50 has been a positive for Sterling, and we’ve seen the pattern of a softer Brexit outlook resulting in a stronger Pound on a number of occasions since the vote in 2016.
  9. The Pound Australian Dollar (GBP/AUD) exchange rate is up today and is trading around AU$1.8173 on the inter-bank market. The Pound (GBP) gained on the Australian Dollar (AUD) today as Prime Minister Theresa May’s Brexit ‘Plan B’ is beginning to gain traction, with the EU’s Chief Brexit Negotiator, Michel Barnier, saying that developments between the UK and the EU ‘could start moving rapidly’.
  10. The GBP/AUD exchange rate has today hit close to 1.81, the highest level since 1st January. The Australian economy has it’s own concerns. The ongoing trade war between China and the US is having a knock on effect on the Australian Dollar due to Australia’s heavy reliance on China purchasing it’s goods and services.
  11. Pound Sterling is trading marginally softer against the Australian Dollar at the start of the new week with the GBP/AUD exchange rate quoted at 1.7937, having opened at 1.7959. The Australian Dollar is bid thanks to Chinese GDP data that met expectation after the world's second largest economy and Australia's number-one export destination reported growth of 6.4% year-on-year. However, gains were tempered by some disappointing domestic data after the HIA New Home Sales showed a month-on-month decline in prices of 6.7% in December. The data will keep alive concerns for the trajectory of Australia's housing market which remains the pre-eminent domestic headwind for the Aussie Dollar. The technical picture for GBP/AUD meanwhile remains neutral given the mixed signals the charts are giving on different timeframes.
  12. The Pound-to-Australian-Dollar exchange rate has remained slightly elevated from the spot open of $1.78 on Sunday, quoted at $1.7883 at the time of writing. This "tentative" advance in GBP/AUD comes despite speculation that the US and China will reach a deal, something widely tipped to see a rise in risk-sensitive currencies such as the Aussie dollar. The the AUD, among other commodity currencies, is lower following the weaker Chinese trade data which have also weighed modestly on the CNY. PREVIOUSLY: The start of last week’s session saw the Pound to Australian dollar exchange rates buoyed on currency markets, however as the week progressed, the British currency fell to a low of AU$1.76. The Australian Dollar was weighed down by the release of the AiG Performance of Manufacturing Index for December, which showed the manufacturing sector contracted from 51.3 to 49.5. The week also saw a decrease in global economic risk sentiment as the US and China engaged in trade talks that included a third, unscheduled day of discussions, enabling risk-sensitive currencies such as the ‘Aussie’ to benefit. Parliament returned from recess to continue Brexit discussions, with the debate over Theresa May’s Withdrawal Act weighing down the Pound.
  13. Pound to Australian Dollar Exchange Rate Gains despite Anticipation for Tuesday Brexit Vote Despite market fears that Tuesday’s highly anticipated UK Parliament Brexit vote will fail, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rebounded slightly when markets opened on Monday morning. Last week, Brexit uncertainties and higher risk-sentiment left GBP/AUD tumbling for most of the week. GBP/AUD opened the week at the level of 1.7875, before sliding and briefly hitting a low of 1.7620 on Friday morning. However, GBP/AUD recovered on Friday and closed the week nearer the level of 1.7788. At the time of writing GBP/AUD had recovered some of last week’s losses already and trends closer to the level of 1.7838.
  14. The Australian Dollar (AUD) struck higher against the Pound (GBP) on Thursday morning as a sell-off of the US Dollar (USD) on Wednesday evening helped to bolster demand for risk-sensitive currencies. This sell-off in USD came in the wake of a raft of dovish signals from the Federal Reserve, indicating the US central bank may purse a less aggressive path for monetary policy in 2019 than previously indicated. The minutes from the Fed’s December policy meeting, releases on Wednesday evening revealed that the bank was split last month, with some members of the Federal Open Market Committee (FOMC) arguing against a rate hike. These members pointed to weak inflation readings as well as suggestions of a global slowdown as reasons for the Fed to adopt a ‘wait and see’ approach until there is greater clarity on how economic conditions are likely to develop.
  15. The Australian Dollar advanced against most rivals Tuesday even after official data revealed a steep fall in the nation's trade surplus for November, and is likely to remain on its front foot over the coming weeks according to Westpac. Australia's goods trade surplus fell from a downwardly-revised $2.01 billion to $1.93 billion during November when economists had looked for a surplus of around $2.18 billion. "This was largely due to strong rises in the volatile civil aircraft component and an increase in automobiles. The latter is unlikely to continue, given the consistent falls seen in car sales. The monthly rise in export values was largely attributable to the volatile non-monetary gold segment," says Jack Chambers, an economist at Australia & New Zealand Banking Group (ANZ).
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