Last week’s high: AU$1.7726
Last week’s low: AU$1.7295
Signs of Weakness in Global Growth Weakens Risk-Sentiment and Australian Dollar
The Pound to Australian Dollar exchange rate ultimately slipped last week, as Sterling remained weak on Brexit fears despite the Australian Dollar’s late-week slump.
Brexit uncertainties worsened considerably throughout the week, as UK Prime Minister Theresa May delayed an anticipated parliamentary vote on her Brexit deal yet was unable to secure any additional assurances or concessions from the EU.
Theresa May’s inability to boost the popularity of her deal left investors uncertain about the future of Brexit, as her soft Brexit plan is not expected to be able to pass through Parliament when a vote does eventually take place.
This prevented the Pound from recovering much at the end of the week, but GBP/AUD still edged higher as investors sold the Australian Dollar.
On Friday, investors were spooked by news that Chinese data had come in well below expectations, worsening concerns about growth in the economy of Australia’s biggest trade partner. This also worsened market concerns about global growth in general.
Ultimately though, the Australian Dollar benefitted from hopes for de-escalating US-China trade tensions last week.
AUD Outlook: RBA Meeting Minutes and Brexit Developments in Focus
With Brexit uncertainties only deepening in the penultimate week of the year, the Pound to Australian Dollar exchange rate will likely see more volatility. Pound investors are likely to brush over UK data and focus on developments in UK politics, particularly any signs that could indicate the direction the Brexit process takes next.
Sterling demand may rise if there are any signs that the UK could hold a second referendum, but if not the other potential outcomes may include a general election or a ‘no-deal’ Brexit.
Australian news and risk-sentiment could drive the Pound to Australian Dollar exchange rate next week too.
The Reserve Bank of Australia’s (RBA) latest meeting minutes report could inspire ‘Aussie’ movement if the bank’s monetary policy outlook surprises investors. Australia’s November jobs market report on Thursday may also prove influential.
As always, signs of de-escalation between the US and China would also leave the relatively risky Australian Dollar more appealing.
00:00 Australian HIA New Home Sales
00:30 Reserve Bank of Australia (RBA) Meeting Minutes
09:30 UK Inflation Rate
11:00 UK CBI Industrial Trends Orders
Australian Westpac Leading Index
00:30 Australian Job Market Report
09:30 UK Retail Sales Report
11:00 UK CBI Distributive Trades
12:00 Bank of England (BoE) Policy Decision
00:01 UK GfK Consumer Confidence
09:30 UK Growth Rate
09:30 UK Business Investment
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