April 26, 2019 - Written by John Cameron
STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Falls as Australian PPI Figures Fall Below Consensus
GBP/AUD Exchange Rate Increases as Fears of RBA Rate Cuts Haunt Australian Markets
The Pound Australian Dollar (GBP/AUD) exchange rate is edged higher today and is currently trading around AU$1.8355 on the inter-bank market.
The Australian Dollar (AUD) fell against Sterling (GBP) today following the publication of the Australian Producer Price Index figures for the first quarter, which slipped below consensus to 0.4%.
These were followed by the yearly PPI figures which also fell below forecast.
However, speculations over a possible near-term rate cut from the Reserve Bank of Australia (RBA) is continuing to weigh on the ‘Aussie’ today.
Joseph Capurso, a Senior Currency Strategist at the Commonwealth Bank, commented:
‘The interbank futures market is pricing two rate cuts by the RBA by the end of 2019. While financial markets are pricing a RBA rate cut cycle [the ‘Aussie’ to weaken].’
Iron ore prices, of which the Australian economy is highly sensitive to, stabilised on Thursday, with minimum movement seen across the grades. This has leant little support for the AUD/GBP exchange rate.
The Pound, meanwhile, gained on the ‘Aussie’ following the publication of the UK BBA mortgage approvals figures for March, which rose to 39.980K.
GBP/AUD Exchange Rate Rises as Foreign Secretary Says No Deal is Better than No Brexit
Brexit news has come to a standstill as cross-party talks between the Labour and Conservative party this week have shown little development.
Meanwhile, Jeremy Hunt, the Foreign Secretary, has said that a no-deal Brexit would be better than staying in the European Union.
‘As far as Brexit is concerned, my view is very straightforward. We have to leave, leave quickly and leave cleanly… If there was a choice between no deal or no Brexit I would choose no deal because I think the democratic risk of no Brexit ultimately is higher than the economic risk of no deal.’
Controversy has also sparked up in the Conservative party following a controversial leaking of details of a vote that took place during a National Security Council Meeting.
Former cabinet secretary Gus O’Donnell described the leak as ‘incredibly serious’, saying that this issue is ‘massively important’ for the country.
During a time of political volatility surrounding Brexit, this is weighing on confidence in the Conservative party – and on Theresa May’s leadership, as trust is increasingly being eroded in matters of national security.
GBP/AUD Forecast: Sterling Could Rise on Signs of a Fourth ‘Meaningful Vote’
‘Aussie’ traders will be looking ahead to next week, which will see the US and China once again restart trade talks.
And with the Australian economy particularly reliant on the Chinese economy, any signs of a breakthrough between the two superpowers would see the ‘Aussie’ strengthen on renewed risk appetite.
Tuesday, meanwhile, will see the publication of the Australian AiG Performance of Management Index for April.
Sterling traders will also be looking forward to Tuesday’s printing of the GfK consumer confidence figures for April.
The GBP/AUD exchange rate is likely to remain dictated by Brexit developments next week, and with any indications of the government going ahead with a fourth ‘meaningful vote’ could buoy Sterling trader’s confidence in a breaking of the political deadlock.
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TAGS: Australian Dollar Forecasts Pound Sterling Forecasts