Pound Australian Dollar (GBP/AUD) Exchange Rate Plummets as No-Deal Fears Return

July 16, 2019 - Written by John Cameron

STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Plummets as No-Deal Fears Return

GBP/AUD Exchange Rate Sinks by -0.6% as Tory Leadership Candidates Harden Brexit Stance

The Pound Australian Dollar (GBP/AUD) exchange rate fell by -0.6% today, leaving the pairing fluctuating around AU$1.7671 on the interbank market.

The Pound (GBP) plummeted against many of its competitors today following heightened no-deal Brexit fears.

This came following both Tory leadership candidates – Boris Johnson and Foreign Secretary Jeremy Hunt – declared the Norther Ireland backstop effectively ‘dead’ and said that they would throw this out in their future negotiations with the EU.

Neale Richmond, the Irish Brexit spokesman, said:

‘While it is no one’s preferred destination, it gives all sides the vital insurance policy to allow a new relationship between the EU and the UK to be formulated. The withdrawal agreement is the only vehicle towards a managed Brexit. It won’t be reopened.’

The Australian Dollar (AUD) meanwhile soared against Sterling despite the Reserve Bank of Australia (RBA) flagging another interest rate cut if stimulus fails to improve jobless numbers.

The RBA showed a degree of optimism in its minutes, however, saying:

‘[M]ost of the strength in labour demand over preceding months had been met by an increase in participation, which had risen to a record high level, rather than a decline in the unemployment rate.’

GBP/AUD Exchange Rate Falls as Brexit Fears Overshadows Positive UK Economic Data

The Pound failed to benefit from the release of the UK average earnings figures for May.

These beat forecasts and rose to 3.4% - their best in 11 years.

Alok Sharma, the Employment Minister, commented:

‘Wages outpacing inflation for 16 months in a row, more people in work than ever before and joint-record female employment, means better prospects for many thousands of UK families and shows the continued resilience of the UK labour market.’

UK employment, meanwhile, held at 3.8% – a 45-year low.

Matt Hughes, the Deputy Head of Labour Market Statistics at ONS, said:

‘The number of self-employed part-timers has passed one and a half million for the first time, well over double what it was twenty-five years ago.’

The UK’s increased fears of over a disorderly Brexit have however overshadowed today’s encouraging economic data.

GBP/AUD Outlook: Brexit Developments to Remain in Focus

Australian Dollar traders will be looking ahead to tomorrow’s Westpac leading index figures for June.

Any signs of improvement could see the ‘Aussie’ hold on to some of today’s gains.

Sterling investors, meanwhile, will be looking ahead to tomorrow’s year-on-year Consumer Price Index figures for June.

These could provide some much-needed uplift for the Pound if they rise.

Tomorrow will also see the UK PPI figures for June, which are, however, expected to ease.

The GBP/AUD exchange rate will be dictated by Brexit developments this week, with focus remaining on the two Tory leadership candidates stance on the Northern Irish backstop in the spotlight.

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