Last week’s high: AU$1.8140
Last week’s low: AU$1.7808
Australian Dollar Steadies as Brexit Uncertainty Weighs on Pound
The Pound (GBP) was subdued at the start of the week despite mounting cross-party opposition against a no-deal Brexit.
Tuesday saw the Pound sink further against the Australian Dollar (AUD) after the Reserve Bank of Australia’s (RBA) board took a wait-and-see approach toward monetary policy.
However, US-China trade turmoil continued to mar the Australian currency’s risk-averse gains when US President Donald Trump escalated tensions between the two superpowers by warning a trade deal would be unlikely if Beijing used force against protestors in Hong Kong.
Thursday saw the Pound surge against many of its peers when Prime Minister Boris Johnson’s visit to Europe proved surprisingly positive, the unusually receptive French premier, Emmanuel Macron offering some hope by hinting at EU concessions over the Irish backstop.
But these gains were short-lived when Friday saw the GBP/AUD exchange rate stabilise and doubts emerge for the UK government’s ability to meet the EU challenge and formulate alternative proposals to the backstop in 30 days.
AUD Outlook: Brexit Developments to Remain in Focus
Brexit will remain in focus next week as all eyes turn to the Conservative Party and their bid for an alternative to the backstop.
No-deal fears are likely to rise at any sign of parliamentary division over the issue and, in turn, exert further downward pressure on the Pound.
With a quiet week of data ahead, AUD investors will be paying close attention to global economic developments, with any flare-up between the US and China likely to weaken the risk-averse ‘Aussie’.
On the UK data front, Sterling traders will turn their attention to Friday’s release of the GfK consumer confidence gauge for August.
The GBP/AUD exchange rate looks set to remain volatile throughout the week as Brexit uncertainty continues to weigh on investor sentiment.
09:30 UK BBA Mortgage Approvals (Jul)
02:30 Australian Construction Work Done (Q2)
00:01 UK GfK Consumer Confidence (Aug)
02:30 Australian Building Permits (Jul)