Minor Drop in GBP AUD Exchange Rate Follows Confident Comments from RBA Governor

February 24, 2017 - Written by Minesh Chaudhari

STORY LINK Minor Drop in GBP AUD Exchange Rate Follows Confident Comments from RBA Governor

GBP AUD Exchange Rate Worsens as Uncertainty Persists over Article 50 Debates

UK data has been thin on the ground today, resulting in a slight drop for the Pound against the Australian Dollar.

The only direct news has covered BBA mortgage approvals in January, which have risen from 43.23k to 44.7k.

The ongoing Article 50 debates in the House of Lords have failed to cause much movement for the Pound today; the latest commentary has instead come from Irish Prime Minister Enda Kenny.

Forecasting when the Government might trigger Article 50 to start exiting the EU, Kenny has stated;

‘We had expected that the Prime Minister was going to move Article 50 on a particular date [March 9th]. I think that might be delayed a little’.

If Theresa May does miss the presumed trigger date in early March, the Pound may rally due to signs of a longer-than-expected UK stay in the EU, though this is largely dependent on when the Lords conclude their discussion of the Article 50 bill.

GBP Forecast: Confidence Stats and PMI Printings in Focus Next Week

The Pound is in for another glut of political developments and data releases next week, starting off with the GfK consumer confidence score on Tuesday.

This will be followed from Wednesday to Friday by manufacturing, construction and services PMIs. These previously dropped in January, but provided they remain in the over-50 growth range next week, the Pound may remain strong even if drops closer to 50 are recorded.

Less predictably, the Lords are due to continue debating the Article 50 bill next week; if any amendments get approved for the bill, then the Pound could rally on hopes of a smoother UK-EU separation in the future.

AUD GBP Exchange Rate Advances after RBA Governor Predicts ‘Stability’

Today’s Australian Dollar advance has been triggered by recent comments from Reserve Bank of Australia (RBA) Governor Philip Lowe, who was testifying to a committee panel.

Lowe has been broadly optimistic, stating that a ‘period of stability’ is likely for national interest rates. Additional Australian Dollar support has come from the statement that;

‘The issue though would be how effective lower interest rates at this point would be in stimulating demand and employment. I think there are probably more effective ways of doing that’.

AUD Weekly Predictions: GDP Data and Trade Balance Stats Incoming

Next week, the biggest Australian economic announcements are expected to come over Wednesday and Thursday, covering Q4 GDP growth rates and the balance of trade in January.

In previous postings, GDP fell in Q4 on the quarter but rose on the year, while the December trade surplus came in at 3.51bn.

Outside of this direct data, the AUD could also be shifted by US PMIs due on Wednesday and Friday next week, which could boost Australian Dollar demand given that they are forecast to drop.

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TAGS: Australian Dollar Forecasts