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Optimism about Government?s Brexit Meeting Pushes GBP/AUD Exchange Rate Higher

February 23, 2018 - Written by James Fuller

Over Thursday’s trading session, the Pound to Australian Dollar exchange rate saw a minor decline.

The GBP/AUD pairing opened trading in the region of 1.7836, later falling back to a slightly lower rate of 1.7798 by the end of daily trading.

UK economic news was generally negative, with three announcements over the morning all contributing to lower confidence in the Pound.

The day opened with news that the Office for National Statistics (ONS) had downgraded its UK GDP growth readings for Q4 2018.

Both the quarter-on-quarter and year-on-year readings were revised down, from 0.5% to 0.4% and from 1.8% to 1.4% respectively.

Concluding that the data would reduce the odds of a Bank of England (BoE) interest rate hike in the near-term, Samuel Tombs of Pantheon Macroeconomics said;

‘All told, the latest GDP data suggests that the economy remains in a fragile state and does not need to be cooled with another [interest] rate rise as soon as May’.

Taking an opposite stance, however, Howard Archer of EY ITEM Club forecast that;

‘With the Bank of England keen to gradually normalise monetary policy and the economy likely to see essentially stable growth during 2018, we expect two interest rate hikes this year in May and November’.

Other news that dragged on the Pound yesterday was data for business investment, which showed a flat 0% reading for investment on the quarter in Q4 2018.

Annual business investment was reported higher, but the Pound was still negatively affected by this data.

Rounding off a bad day for GBP traders, Confederation of British Industry (CBI) retail sales levels were reported to have fallen in February.

On the other side of the pairing, a lack of high-impact AU data didn’t stop the Australian Dollar from advancing against the Pound and most other peers over Thursday afternoon.

This was due to external factors – the US Dollar weakened because of concerns about higher interest rates, which in turn raised demand for the riskier Australian Dollar.

Pound to Australian Dollar Exchange Rate Rises on Mixed Messages from Chequers Meeting

The Pound to Australian Dollar (GBP/AUD) exchange rate has risen today, following the conclusion of high-level talks at the Prime Minister’s country retreat.

PM Theresa May and top-level cabinet colleagues met at Chequers on Thursday and after a marathon meeting have emerged stating that progress was made.

Although ministers coming out of the meeting have offered contrasting takes on what was proposed by the Prime Minister, the general consensus is that the result was more positive than negative.

Brandon Lewis, Chairman of the Conservative Party, said afterwards about discussions of the official Brexit position that;

‘What I can say to you is the outcome of those discussions will come to cabinet in the next few days, and late next week the PM will make a statement, a speech and outline what that position is.

[There will] absolutely [be agreement], yes’.

Australian Dollar to Pound Exchange Rate Slides after Deputy PM Joyce Resigns

The Australian Dollar has fallen by -0.4% in trading against the Pound today, following the news that Deputy Prime Minister Barnaby Joyce is resigning.

Mr Joyce has served as Deputy PM for the National Party, in a coalition with Prime Minister Malcolm Turnbull of the Liberal Party.

Joyce was previously caught up in the citizenship scandal of 2017, but has finally seen himself out because of an affair with his former secretary.

By a technical basis, the coalition will not lose its one-seat majority in parliament, but this news has still shaken AUD traders because it risks a potential election.

Pound to Australian Dollar Weekly Exchange Rate Forecast: GBP/AUD Turbulence possible on Confidence Score

The coming week’s UK economic data to watch out for will start arriving on Wednesday, when the GfK consumer confidence reading for February will be announced.

This is tipped to show a worsening of already-negative confidence levels, with a shift from -9 points to -10 over the month.

Later on, Thursday will bring the first of a number of major PMI readings for February. First up will be the manufacturing sector activity figure, which is expected to show a minimal reduction.

Similarly minor movement has been forecast for Friday’s construction PMI reading, although most forecasts are pointing towards growth in the sector during February.

After the dust settles from Barnaby Joyce’s resignation announcement, the Australian Dollar’s value could be affected by the AIG manufacturing activity index which is out on Wednesday.

This figure is projected to show a minor decline from 58.7 points to 57.16; depending on other factors at the time, the Australian Dollar may briefly slip against the Pound on such news.
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