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Pound to Australian Dollar (GBP/AUD) Exchange Rate Down as UK Car Sales Tumble for Second Year in a Row

January 7, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Rangebound as 200 MPs Demand May to Stop ‘No-Deal’ Brexit

The Pound Australian Dollar (GBP/AUD) exchange rate is rangebound today and is currently trading within the region of AUD$1.7850.

The Pound (GBP) has remained static against the Australian Dollar (AUD) today after the release of the UK’s new car sales showed a year-on-year decrease of -5.5% against last year’s -3% – thus falling for the second year in a row.

Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders, said that ‘Brexit is an issue’ but also said that it would be ‘unfair to attribute [the decline] wholly to Brexit’ highlighting a combination of new emissions tests causing a supply chain stall, and generally low consumer confidence.

The Australian Dollar (AUD) was weakened on Sunday after the publication of Australia’s AiG performance of manufacturing index for December showed a decrease to 49.5 against November’s 51.3 – bringing Australia’s manufacturing sector into contraction for the first time in over two years.

The Pound, however, has failed to make any gains on the Australian Dollar today, with Brexit concerns heating up ahead of Wednesday, when the House of Commons is set to return to debate Prime Minister Theresa May’s UK-EU withdrawal agreement.

The Pound Australian Dollar exchange rate also remains weak today after May received over 200 signatures from MPs – from both Leavers and Remainers – in a call to rule out a ‘no-deal’ scenario. This shows an increasing divide between the government and Parliament.

Brexiteer MP Boris Johnson, dismissed their concerns, commenting:

‘In spite of - or perhaps because of - everything they have been told, it is this [no deal] future that is by some margin preferred by the British public.’

Australian Dollar Pound (AUD/GBP) Exchange Rate Steady as US and China Talk Trade in Beijing

The risk-sensitive Australian Dollar has been strengthened on news of a potential quelling of US and China trade tensions after the spokesman for China’s foreign ministry, Lu Kang, commented that China is willing to concede its trade disputes with the US.

Lawrence J. Lau, an economics professor at the Chinese University of Hong Kong, said that he is ‘pretty confidence that they will come up with something’ and added: ‘There will be something concrete at the end . . . and if there’s a settlement, there shouldn’t be any [additional] tariffs.’

AUD investors, however, have remained cautious, with concerns over global economic growth raising alarm for the risk-sensitive Australian economy, with Frederic Neumann, Co-head of Asian Economics Research at HSBC, commenting:
‘China’s domestic growth fizzle has much to do with this, with both its PMIs dipping below the waterline last month. But demand looks wobbly elsewhere, too, including in the US where manufacturing activity seems to be slowing.’

GBP/AUD Outlook: Brexit Debates back in Spotlight

GBP may lose further ground on the ‘Aussie’ tomorrow after the release of Australia’s Trade Balance figures for November, which are expected to increase.

However, Sterling could make up ground if the UK’s publication of the Halifax house prices index for November shows any signs of a significant increase, potentially bolstering the GBP/AUD exchange rate.

Later tomorrow will see the release of Australia’s Performance of Services Index for December, with any signs of bearishness potentially weakening the ‘Aussie’ and providing a leg-up for Sterling.

GBP investors, however, will be focusing on Brexit this week with the House of Lords due to return on Wednesday, when Parliament is set to resume its Brexit deal debate. Any signs of resistance against Theresa May’s Brexit deal could exacerbate fears over a ‘no-deal’, further weakening the GBP/AUD exchange rate.

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