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GBP/AUD Exchange Rate Hit by Political Uncertainties despite Risk-Off

 

Last week’s high: A$1.8435

Last week’s low: A$1.7944

 

Pound Slumps as No-Deal Brexit Fears are Reignited

The Pound to Australian Dollar exchange rate fell markedly last week as Sterling was hammered by fears that a no-deal Brexit was becoming increasingly likely following the vote in the House of Commons in which MPs approved an amended EU withdrawal agreement that seeks to get rid of the loathed Irish backstop clause.

Sterling exchange rates came under more pressure at the end of the week with the release of the UK’s latest manufacturing PMI stats, which saw UK factory activity moderate at the beginning of the year.

At the same time, the Australian Dollar suffered from a fall in the Chinese Caixin manufacturing PMI, which slumped into contraction territory, dragging down the ‘Aussie’ with it.

 

AUD Outlook: BoE and RBA in Spotlight but will Brexit cause further Uncertainty?

Looking ahead, discounting any potential Brexit developments, movement in the GBP/AUD exchange rate is likely to driven by the Bank of England’s (BoE) interest rate meeting on Thursday

Before then, we’ll see plenty of UK related economic data, in the form of services and construction PMIs, as well as house prices and retail sales

There is also a central bank meeting in Australia scheduled for Tuesday, although investors are not expecting to see any changes to rates at this point.

As in recent weeks, although much important data is scheduled to be released, the GBP/AUD exchange rate is likely to be driven by developments in Brexit negotiations between the Uk and EU, as well as shifts in risk sentiment, primarily driven by US-China trade talks.

 

Key Events

4th February

00:30   AU Building Permits (Dec)

09:30 UK Construction PMI (Jan)

5th February

00:01 UK BRC Retail Sales (Jan)

09:30 UK Services PMI (Jan)

15:30 AU RBA Interest rate Decision

7th February

08:30 UK Halifax House Price Index (Jan)

12:00 UK BoE Rate Decision

8th February

00:30 AU RBA Monetary Policy Statement

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To keep up to date with the Australian Dollar, visit the AUD blog in our Currency News section.

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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