November 29, 2019 - Written by Tim Boyer
STORY LINK GBP to AUD Exchange Rate Slips from Best Post-Referendum Levels amid Lack of Fresh Support
While the British Pound to Australian Dollar (GBP/AUD) exchange rate has advanced this week, it has not been able to hold too close to the pair’s best levels in years. Instead, the latest mixed UK confidence stats, as well as lingering hopes that US-China trade relations can still improve, left the pair trending slightly lower before markets closed for the week. For the time being, investors are awaiting UK political developments and US-China trade developments.
Since opening this week at the level of 1.8907, GBP/AUD has been trending with a strong upside bias due to poor demand for the ‘Aussie’.
Yesterday, GBP/AUD touched on a high of 1.9138 – which was the pair’s best level since the 2016 Brexit Referendum. While GBP/AUD has slipped back from those highs, the pair is still on track to have sustained around a cent of gains this week overall and is trending close to the level of 1.9029 at the time of writing on Friday.
GBP Exchange Rates Fail to Find Fresh Support as UK Confidence Remains at Lowest Levels
The Pound has seen mixed movement this week, but ultimately looks to end the week higher despite the uncertainties still weighing in the currency’s outlook.
Earlier in the week, the Pound’s appeal was limited by polls showing that Britain’s opposition Labour Party was narrowing the gap on the ruling Conservative Party’s lead.
Since then, a new major poll indicating that the Conservatives are on track to win a solid majority in next month’s election has boosted the Pound higher again.
This is because a Conservative majority would help the party to push through its relatively soft Brexit plan and make a no-deal Brexit less likely.
Still, the Pound was unable to hold its best levels as uncertainties persisted. There is still concern that the race could narrow and lead to a potential hung Parliament, and this morning’s UK data showed continued uncertainty is keeping economic activity limited.
GfK’s November consumer confidence report remained at -14 as analysts predicted. The data didn’t have much impact on Sterling but certainly didn’t give investors fresh reason to buy the currency.
According to Joe Staton, Client Strategy Director at GfK:
‘Uncertainty is nobody’s friend. So, while many issues are under the spotlight in this election, political parties will need to satisfy voters that they will be effective for the wider economy and that, as a consequence, people will be better off next year and beyond.’
AUD Exchange Rates Benefit from Limited Trade Hopes
After spending much of yesterday lacking demand due to concerns that US-China trade tensions were worsening again, the Australian Dollar is climbing a little before markets close for the week.
The ‘Aussie’ gained on the Pound despite a lack of fresh supportive ecostats or notable trade news, largely due to investors adjusting positions and firming ahead of hopes for trade developments over the next week.
Analysts have speculated that if there is any progress in US-China trade relations, it is more likely to happen during or after the weekend.
While US-China trade relations have been strained a little by speculation that China could retaliate to US President Donald Trump’s decision to support Hong Kong protestors, there are still hopes that officials will keep trying to pull a deal together.
These hopes are keeping the Australian Dollar steady before markets close for the week, despite this week’s rise in Reserve Bank of Australia (RBA) interest rate cut bets.
GBP/AUD Exchange Rate Forecast: Markets Await Key Australian Growth Report
Reserve Bank of Australia (RBA)
interest rate cut bets have been rising in recent weeks, but they could still be heavily influenced if there is a surprise in major Australian data.
While Pound investors will continue to focus on UK election polling, with under two weeks until the election, the Australian Dollar could be influenced heavily by both US-China trade developments and upcoming Australian data.
Any weekend shifts in US-China trade relations are likely to influence trade-sentiment and the trade-correlated ‘Aussie’ when markets open on Monday, and further developments will continue to be a big focus for AUD.
Multiple key Australian ecostats will be published over the next week, including the nation’s latest building permits and growth rate reports.
The Reserve Bank of Australia is not expected to change monetary policy at Tuesday’s upcoming decision, but the tone the bank takes combined with Australia’s Q3 growth rate results on Wednesday could cause major Pound to Australian Dollar exchange rate movement.
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TAGS: Pound Australian Dollar Forecasts