Supreme Court Speculation Causes Uptick in GBP AUD Exchange Rate

January 23, 2017 - Written by Tim Boyer

STORY LINK Supreme Court Speculation Causes Uptick in GBP AUD Exchange Rate

The British Pound to Australian Dollar exchange rate trended around half a cent down on Tuesday afternoon as demand for risk-correlated currencies improved despite continued anxiousness among investors about the Trump administration.

Concerns about Australasian trade eased slightly on Tuesday amid news that Australian and New Zealand governments looked to continue TPP negotiations without the US, after Trump withdrew the US from negotiations on Monday.

[Previously updated 23/01/2017]

Reaction to the Supreme Court ruling has been volatile, although the Pound to Australian Dollar exchange rate remained on a narrow uptrend.

Even though the ruling stated that the government must consult parliament before triggering Article 50 there was some concern over the dismissal of the role of the devolved governments, a snub which could raise the risk of a second Scottish independence referendum.

[Previously Updated 23/01/2017]

The Pound has risen against the Australian Dollar this morning as observers expect the government to lose its Supreme Court battle for the right to trigger Article 50.

Pound Australian Dollar (GBP AUD) Rises as Supreme Court Prepares Article 50 Ruling

The Pound Australian Dollar (GBP AUD) exchange rate appreciated today as markets predict the UK government will lose the right to trigger Article 50 of the Lisbon Treaty following a lengthy Supreme Court battle.

This follows a High Court case late last year that contested the government’s ability to invoke Article 50 and begin formal 'Brexit' negotiations without it passing a vote in parliament.

Sterling sentiment improved as traders believe that should the government face a vote in parliament it may be forced to adopt a softer 'Brexit' than Prime Minister Theresa May outlined in her 'Brexit' speech last week.

However with the same speech giving MPs and peers the promise that they will be able to vote on the final terms of the government’s 'Brexit' deal, the ruling may not have the same level of impact as initially believed.

This is especially true as Labour Leader Jeremy Corbyn is reportedly set to ask his Labour MPs to back the vote to trigger 'Brexit' should the government lose its case saying;

‘It's very clear the referendum made a decision that Britain is to leave the European Union. It was not to destroy jobs and living standards or communities, but it was to leave the European Union and have a different relationship in the future.’

Slump in Iron Ore Prompts Drop in Australian Dollar

The Australian Dollar stumbled today as prices for its largest export, iron ore slipped amid a slowdown in the Chinese market as it prepares for New Year celebrations.

Prices remained below $80 a tonne at the close of the Asian trading session this morning as the holiday shutdown was compounded by the recent announcement of further steel production cuts as the Chinese government attempts to tackle rising environmental concerns.

A thick cloud of smog has blanketed much of the nation's capital in recent weeks, causing officials to target cuts in rebar factories in the south.

While iron ore remained resilient despite these cuts for much of last week, there are worries that a fall in demand as production slows could set prices tumbling in the coming months, weighing on the ‘Aussie’.

GBP AUD Exchange Rate Forecast: UK Retail Sales Data Ahead

Excluding the Supreme Court ruling tomorrow, the GBP AUD exchange rate may also rise on Tuesday following the latest Public Sector Borrowing figures, which are forecast to show that the public deficit narrowed from £12.21bn to £7.2bn in December.

Meanwhile, the Australian Dollar may rally on Wednesday with the release of its Consumer Price Index, with inflation expected to have risen from 1.3% to 1.6% in the fourth quarter.

Current Interbank Exchange Rates

At the time of writing the GBP AUD exchange rate was trending around 1.64 and the AUD GBP exchange rate was trending around 0.60.

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