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GBP/AUD Exchange Rate Slumps as Australian Consumer Confidence Improves

Last week’s high: AU$1.2971

Last week’s low:  AU$1.2776

 

Australian Dollar Rises as Consumer Confidence Unexpectedly Rebounds

Last week saw the Pound Australian Dollar (GBP/AUD) exchange rate weaken, as concerns over Brexit once again came to the fore, while Australian consumer confidence picked up.

In the UK, GDP growth was revealed to have hit a six-year low, expanding by only 1.4% on the year, which lowered Sterling sentiment.

At the same time, Australian Dollar sentiment was helped by an unexpected uptick in consumer sentiment, with the Westpac index for February showing a jump to 103.8.

US-China trade discussions in Beijing took place last week but ultimately proved inconclusive, with the ‘Aussie’ benefitting from US President Donald Trump’s comments that the 1 March deadline could be put back.

Thursday saw the Pound fall back as markets became wary of Sterling ahead of the latest Brexit vote in the House of Commons, and although Theresa May was defeated the Pound failed to react in the aftermath as some traders had feared it would.

Friday saw the Pound regain some lost ground from the Australian Dollar when the latest UK retail sales figures were published.

With the figure only expected to have increased by 0.2%, the actual figure of 1.2% smashed expectations and gave the GBP/AUD exchange rate a lift.

 

AUD Outlook: Australian Central Bank Minutes Likely to be Cautious

The release of the Reserve Bank of Australia’s (RBA) latest meeting minutes could limit Australian Dollar strength this week.

Given the dovish nature of recent comments from RBA Governor Philip Lowe, signs point towards a set of cautiously-worded minutes, potentially leaving AUD exchange rates exposed to downside pressure.

If the RBA looks set to leave interest rates on hold for longer, or raises the prospect of a rate cut, this is likely to undermine the Australian Dollar.

December’s UK labour market data may offer the Pound a boost tomorrow if the unemployment rate improves as expected.

If the labour market continues to tighten, even in the face of Brexit jitters, this could give the GBP/AUD exchange rate a solid basis for strengthening this week.

 

Key Events

18th February

01:01   GBP Rightmove House Price Index (Feb)

19th February

00:30   AUD RBA Meeting Minutes

09:30   GBP ILO Unemployment Rate (3M) (Dec)

09:30   GBP Claimant Count Change (Feb)

09:30   GBP Average Earnings (Dec)

20th February

00:30   AUD Wage Price Index (Q4)

21st February

00:30   AUD Unemployment Rate

 

 

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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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