Last week, the Pound opened trading against the Australian Dollar at a level of AU$ 1.8049 and closed higher around AU$ 1.8582.
This appreciation was brought on by hopes that the UK might still secure a workable Brexit arrangement with the EU by the November deadline, despite evidence to the contrary.
Both UK and EU leaders pledged their commitment to working through current issues associated with the Brexit process, with the Irish border problem being a particular point of focus.
Recurring Business Fears over Brexit Cause GBP/AUD Exchange Rate Losses
Unfortunately for Pound Sterling (GBP) traders, today has seen the Pound fall back against the Australian Dollar (AUD) to an interbank exchange rate of AU$ 1.8489.
This deterioration follows a number of reports that UK business confidence is falling, mainly because of the continued uncertainty associated with the Brexit process.
British Chambers of Commerce (BCC) Director General Adam Marshall has touched on the problems faced by UK business owners, saying:
’ We are stuck in limbo while Brexit negotiations rumble on.
‘Many firms are deeply invested in developing home-grown skills and talent within their own communities however, this alone is not enough to fill the skills gaps at all levels that businesses face right now and which are set to get worse post-March 2019.’
Adding that falling UK manufacturing exports were an additional problem, Mr Marshall added:
‘These figures reinforce what we are hearing from businesses up and down the country – the uncertainty over Brexit and the lack of bold moves to boost business at home are starting to bite.’
Australian Dollar to Pound (AUD/GBP) Exchange Rate Rises on Pound Sterling Weakness
Despite a lack of strong Australian domestic data today, the AUD/GBP exchange rate has still risen.
This appreciation comes despite the handicap of last week’s US Dollar rise, which was caused by news of a new North American trade deal.
The United States-Mexico-Canada Agreement put an end to fears of a breakdown in North American trading relations, which lent significant support to the US Dollar and other associated currencies.
GBP/AUD Exchange Rate Forecast: Will AU Confidence Data Push Australian Dollar Higher?
Looking ahead, the Australian Dollar (AUD) could take an early lead against the Pound (GBP) on Tuesday morning when NAB’s business confidence reading for September is due out.
This is tipped to show a slight increase in sentiment levels, with a shift from 4 points to 5.
While a minimal increase on paper, such a rise could still support the Australian Dollar and push it up against the Pound, given the scarcity of other economic news.
Moving on to Tuesday afternoon, the Pound will have a slim chance at recovering when Bank of England (BoE) policymaker Ben Broadbent gives a speech.
Mr Broadbent is not expected to explicitly touch on interest rates, but could still boost the GBP/AUD exchange rate if he backs tighter monetary policy in the future.
There will be a similar rerun of Australian and UK data out on Wednesday, which may lead to clear GBP/AUD exchange rate losses.
Wednesday’s early Westpac Australian consumer confidence index is tipped to increase in October, which might cause early Australian Dollar support.
Beyond this, Pound Sterling might decline on the day’s UK GDP growth rate figures for August, which are tipped to show a slowdown during the month.
A forecast-matching dip from 0.3% to 0.1%, coupled with any additional Brexit-related uncertainties, could be all it takes to cause mid-week GBP/AUD exchange rate losses.
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TAGS: Pound Australian Dollar Forecasts