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Pound Australian Dollar (GBP/AUD) Exchange Rate Steady, But Could Sterling Sink on Increasing No-Deal Brexit Fears?

August 7, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Rangebound as Australian Home Loans Figures Fall in June

The Pound Australian Dollar (GBP/AUD) exchange rate steadied today, leaving the pairing trading around AU$1.799.

The Australian Dollar (AUD) held steady against the Pound (GBP) following today’s release of the Australian Home Loans figures for June, which fell below forecasts from -0.3% to -0.9%.

Australian investment lending for homes in June, however, rose from -1.9% to 0.5%.

Matt Comyn, a Chief Executive at CBA, commented:

‘We are in a lower growth environment but we are seeing improvement in the housing market including improved clearance rates, stabilisation of prices in Sydney and Melbourne, and slightly higher housing credit growth.’

This provided some uplift for the ‘Aussie’ today following the currency’s slump following the surprise interest rate cut from the Reserve Bank of New Zealand (RBNZ), which saw the NZ central bank cut its interest rate to 1% instead of the expected 1.25%.

Kiyoshi Ishigane, a Chief Fund Manager at Mitsubishi UFJ Kokusai Asset Management, commented:

‘We were already on edge about all the US tariffs against China, but now people are starting to question whether we're headed toward some global recession.’

GBP/AUD Exchange Rate Steadies despite UK-EU Brexit Deadlock

The Pound (GBP) stabilised against the weakened ‘Aussie’ despite growing concerns over the increasing likelihood of a no-deal Brexit on October 31.

Fears have risen following comments from the former Environment Secretary Michael Gove, who said that the EU was unwilling to renegotiate the withdrawal agreement.

Mr Gove said yesterday:

‘‘At the moment, it's the EU that seems to be saying they're not interested, they are simply saying ‘no, we don't want to talk’. I think that's wrong and sad, it's not in Europe's interests.’

Today also saw the release of the Halifax House Prices figures for July, which fell to a worse-than-expected -0.2%.

Howard Archer, a Consultant at EY ITEM Club, remarked:

‘With Brexit due to occur on 31 October — and it currently very unclear what will happen then — uncertainty will weigh down on the economy over the next few months at least and hamper the housing market.’

GBP/AUD Outlook: Brexit and Global Trade Tensions to Remain in Focus

Sterling traders will be looking ahead to tomorrow’s RICS housing price balance figures for June, which are expected to hold steady at -1%.

‘Aussie’ investors, however, will be looking further ahead to Friday, with Philip Lowe, the Governor of the Reserve Bank of Australia (RBA) due to give a speech.

Any indications that the RBA could follow on with the RBNZ and cut rates in the near-term could substantially weaken the AUD/GBP exchange rate.

Friday will also see the RBA Monetary Policy Statement, which will occupy AUD trader’s attention for any indications of a dovish outlook on the Australian economy.

The GBP/AUD exchange rate is likely to fluctuate this week as global trade tensions and the UK’s Brexit situation are to remain in the spotlight.

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