GBP AUD Exchange Rate Rises after Plummeting to Three-Year Low

October 20, 2016 - Written by James Fuller

STORY LINK GBP AUD Exchange Rate Rises after Plummeting to Three-Year Low

The GBP AUD exchange rate tumbled two cents to a new three-year low yesterday evening as soaring oil prices increased demand for the Australian Dollar (AUD), however this was quickly reversed by disappointing Australian employment data.

Australian Dollar Oil Gains dented by Disappointing Labour Report

The Australian Dollar had a rollercoaster ride last night as surging oil prices caused an uptick in global risk appetite, allowing for significant advances for the AUD GBP exchange rate as traders flocked to the high-yield ‘Aussie’.

The rise in oil prices was driven by an unexpected 5.25million-barrel drop in US crude stocks, and in anticipation of a potential OPEC deal to curb oil production.

However the spike in AUD was short-lived however as Australia’s labour data showed that employment sank to -9.8k for the month of September. Not only did employment fall lower than August’s report of -8.6k but fell majority short of forecasts that it would rise to 15.0k.

Further Collapse of GBP AUD Prevented by Hammond Support for ‘Soft Brexit’

The Pound’s (GBP) dramatic drop against the Australian Dollar last night was likely restrained by UK Chancellor Philip Hammond comments at a Treasury select committee on Wednesday.

Hammond Struck a very different tone to many of his pro-‘Brexit’ colleagues as he pushed for a more measured approach to immigration and attempted to alleviate fears that the UK economy will be thrown to the wolves in ‘Brexit’ negotiations.

Speaking at the select committee he said;

“As we approach the challenge of getting net migration figures down to the tens of thousands it is, in my view, essential that we look at how we do this in a way that protects our economy and protects the vital interests of our economy,”
His comments have helped to calm market anxiety that the UK government was speeding towards a ‘hard Brexit’ which likely aided in the Pound’s recovery this earlier this morning.

Pound Australian Dollar Recovery Muted by Poor Retail Sales

While the Pound was able to claw back its losses against the ‘Aussie’ in the early hours of this morning following the drop in Australian employment it was hindered from advancing further by disappointing retail sales in the UK.

Investors fear a slowdown in the UK economy as retail sales only rose to 0.0%, falling short of predictions that it would reach 0.2% in September.

GBP AUD Exchange Rate Forecast: UK Public Borrowing Figures Due Tomorrow

The GBP AUD exchange rate is likely to continue trading at current levels for the remainder of the week as only the UK has any data left to release, which is increasingly becoming irrelevant for the Pound as it becomes a large politicalised currency.

Current Interbank Exchange Rates

At the time of writing the GBP/AUD exchange rate was trending around 1.60 and the AUD/GBP exchange rate was trending around 0.62.

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