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The Pound vs Australian dollar

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Pound looking to end the week on a high

After some difficult weeks, the pound looks to be ending the week on a high, rising against most major currencies.

Positive retail sales in the UK and snippets of good news on the Brexit front this week appear to be contributing from the pound’s perspective.

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Pound boosted today.

The Bank of England (BoE) Monetary Policy Committee (MPC) voted unanimously to maintain the interest rate at 0.5%. There were hints that rate rises would be on the cards for the future as the Bank of England upgraded forecasts for UK growth from 1.6% to 1.8% for this year. If the economy progresses as forecast, the Monetary Policy Committee highlighted that “monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period”.


 

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The Australian dollar rate has been struggling to find its feet against its counterparts, but against the pound it has made notable progress owing to Brexit uncertainties. The Australian dollar is volatile owing to US-China trade concerns and acts as a barometer of this topic and global trade in general.

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The Pound Australian Dollar (GBP/AUD) exchange rate has recovered slightly after yesterday’s fall, and is now trading at AU$1.7646.

The risk-averse ‘Aussie’ was hit by comments from the US President Donald Trump on Monday, with news that he planned to raise tariffs on US$200 billion in Chinese exports – an increase to 25% against the previous 10%.

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While many countries are hoping for an end to the tensions between US and China which is having such a disruptive effect on global trade, a report suggesting the US-China trade war may not impact Australia as much as initially feared was good news for the country’s currency. Ecostats showed a wider than expected trade surplus but headline inflation slowed to 1.9% in the third quarter, in line with forecasts. Aussie strengthened by 0.5% against the US dollar after the result, and some smaller gains against the greenback after Australia’s employment rate held steady at 5.0% as the number of people in work increased to 33,000 in October, higher than the expected number of 20,000. However, the numbers were not good enough to counter the rising pound and euro after a tide of positive Brexit sentiment.

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GBP to AUD forecast: The next 7 days could have a major influence on the future of GBP/AUD exchange rates as Theresa May is doing everything in her power to convince Conservative MPs to back her Brexit deal.

Over the last 6 weeks GBP/AUD exchange rates have been dropping like a stone. Currently the currency pair has fallen 13 cents and the likelihood is further falls are on the horizon up until December 11th.

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The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped overnight on the RBA’s cash rate release after finding a ceiling at 1.732 in yesterday’s session, the static release of 1.5% prompted another spell to the downside.

The pair is currently at 1.72454, slightly above yesterday’s low of 1.72089 and the yearly low of 1.70980.

In line with institutional expectations, the RBA left the cash rate unchanged at 1.5%, where it has been since 2016.

Speaking with regards to the decision, RBA Governor Philip Lowe painted a picture of global economic expansion but goes on to to comment that trade tensions (read US-China trade war) have the potential to prompt a slowdown in global trade.

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Despite an early-week surge and persisting Brexit fears, the Australian Dollar (AUD) plunged on Wednesday and the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was able to recover its losses.

After opening this week at the level of 1.7447, GBP/AUD plummeted over a cent on news of a US-China trade truce. On Monday, GBP/AUD hit an 11-month-low of 1.7217.

However, GBP/AUD rebounded from its lows on Tuesday and during Wednesday’s session Australian Dollar weakness made it easier for the pair to recover all of its weekly losses and trend nearer the week’s opening levels again.

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The Australian dollar has weakened sharply after Australian GDP (Gross Domestic Product) data saw fresh concerns over the Trade Wars weigh on the AUD. This highlights just how volatile this pairing is after moving close to 6 cents in just a week.

The pound to Australian dollar exchange rate could be about to enter an extremely volatile session as we get closer to the Parliamentary vote on Brexit in the House of Commons next week. The pound has been under real pressure against a much stronger Australian dollar as the market begins to question the likelihood of Theresa May getting her deal through Parliament.

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Any idea that the Aussie had turned a corner in the sentiment stakes was put to rest this week as it moved lower on a broad front. It held its own until Tuesday but then headed decisively south. The Aussie lost almost one US cent and it fell by nearly two against sterling.

Its troubles were the result of a cocktail of confidence denting developments. Reports of a trade deal between Washington and Beijing looked ever less plausible as the White House failed to spell out what had been agreed. Turmoil in global stock markets killed investors’ appetite for “risky” currencies. When the Reserve Bank of Australia kept its Cash Rate benchmark unchanged at 1.5% its statement gave no hint of any increase in the pipeline. As for sterling, investors became less boot-faced about it after a government defeat in the Commons appeared to hand more control of Brexit decisions to Parliament. Therefore, or so the thinking went, a no-deal Brexit had become far less of a possibility.

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The Tories have triggered a vote of no confidence in Theresa May, which causes further uncertainty surrounding Brexit. The 1922 Committee chair, Sir Graham Brady has now received more than the 48 letters required from Conservative MPs for a leadership challenge. Sir Brady has stated there will be a ballot this evening.

Over 20 Conservative back benchers have publicly announced their letters of no confidence have been submitted, among those are several prominent figures of the Tory Party. Former Brexit minister Steve Baker and Chair of the European Research Group, Jacob Rees-Mogg. It seems that the cancellation of yesterday’s vote has proved unpopular amongst Tory members and was the cause of the additional letters to the 1922 committee.

This does not bode well for Sterling with GBP/AUD now in the 1.73s. May’s hopes for renegotiating the Irish Border deal were dashed yesterday when she travelled to the Hague as news emerged Angela Merkel and Jean Claude Junker both told the PM there would be no re-negotiation on the Irish back stop.

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After opening last week at the level of 1.7678, GBP/AUD plummeted and briefly touched on a low of 1.7295 amid UK political fears. GBP/AUD recovered over half of its weekly losses however, closing the week at 1.7530. On Monday morning, fresh market risk-aversion made it easier for GBP/AUD to trend closer to the level of 1.7586.

Despite broad market uncertainty about how the Brexit process could unfold, the volatile Pound edged higher against a weaker Australian Dollar.

Investors sold the relatively risky trade-correlated Australian Dollar, amid market concerns that global growth is slowing. Weaker data in China, Australia’s biggest trade partner, has also weakened the ‘Aussie’.

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The Australian Dollar set a new December low last week as international risk appetites waned but events in the global arena are now expected to provide breathing space to the Antipodean currency during the week ahead. 

Australia's Dollar had trended gently higher last week until dire Chinese economic figures sent it tumbling into the Friday close, although Sterling's own unique weakness meant the Pound-to-Aussie rate simply moved sideways. 

Looking ahead, the Aussie can rise over the coming days if the China story proves supportive. This is a busy week for the Communist Party, which celebrates 40 years of unprecedented economic growth under its leadership.

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he Pound Australian Dollar (GBP/AUD) exchange rate trended higher on Thursday, following the release of some stronger-than-expected UK retail data.

At the time of writing the GBP/AUD exchange rate has risen 0.3% this morning, lifting the pairing to a new one-month high.

The Pound (GBP) was buoyed against many of its peers on Thursday morning as markets reacted to the release of the UK’s latest retail sales figures.

According to data published by the Office for National Statistics (ONS), UK retail sales growth rebounded from -0.4% to 1.4% in November, sailing past forecasts of a more modest 0.3% expansion, thanks to Black Friday offers.

At the same time the Australian Dollar (AUD) found itself on the defensive overnight on Wednesday following the release of Australia’s latest labour report.

November’s data saw the Australian Bureau of Statistics (ABS) report that unemployment unexpected rose from 5% to 5.1% after a rise in the participation rate.

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GBP/AUD Exchange Rate Lower Despite Boost in UK Business Optimism

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate briefly spiked late last night before sliding over the course of this morning, with the currency pair currently trading at a rate of AU$1.8055.

This morning the UK’s December construction PMI was released, falling to a lower-than-expected 52.8 and keeping the Pound under pressure.

Despite the data showing the weakest expansion in business activity in three months, and that the rise in commercial work was its softest since May 2018, there was a boost in business optimism, as a result of hope for an infrastructure boost in 2019.

Economics associate director at IHS Markit Tim Moore emphasised that ‘construction firms remained resilient as optimism for the future rose to an eight-month high.’

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GBP to AUD Forecast: The pound to Australian dollar exchange rates has been very volatile as we begin 2019, rising and falling on various changing sentiments towards both the Brexit and the Trade Wars. The latest news was surrounding the US Non-Farm Payroll data from last week which showed that the US economy is performing much better than expected.

This triggered a rise in the Australian dollar which as a commodity currency, will benefit in times of good news for global trade. The Aussie rose on Friday and has continued to perform well coming into this week, particularly against a weaker pound. Any good news for sterling is often short-lived with the uncertainties of Brexit hanging over the Pound.

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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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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. 

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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.

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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.

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