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GBP/AUD Slips from Best Level since Brexit Vote Ahead of Major Australian Data

Last week’s high: AU$1.8713

Last week’s low: AU$1.8198

 

GBP/AUD Sees Best Level since June 2016 amid Brexit Hopes and Mixed Risk-Sentiment

Due to a combination of fresh Brexit hopes and some weaker market demand for risk sensitive currencies in the middle of the week, the Pound to Australian Dollar exchange rate soared so high that it briefly touched its best levels since the 2016 Brexit vote.

The primary cause of GBP/AUD exchange rate gains last week came as investors bet against a no-deal Brexit. The UK government finally offered Parliament an option to vote against no-deal and potentially vote for a delay to the Brexit process too.

After investors spent most of the week piling into the Pound, jitters that a no-deal was still on the table and that there would be no major developments in Brexit until 12 March left investors selling Sterling from its best levels.

This made it easier for the Australian Dollar to recover a little at the end of the week.

Investors found the relatively risky trade-correlated currency more appealing again as China’s manufacturing PMI from Caixin showed a smaller-than-expected contraction. Continued hopes for US-China trade tensions to be resolved also helped the Australian Dollar to regain some ground.

 

AUD Outlook: Slew of Australian Data Ahead with Brexit Process in Limbo

The UK government’s highly anticipated Parliament Brexit vote will not take place until 12 March, leaving the Pound in limbo for much of this week. Unless there are any surprising Brexit developments the Pound may be able to hold most of last week’s gains.

GBP/AUD could be knocked lower by a stronger Australian Dollar too, if upcoming Australian data impresses investors.

In what is set to be a big week for Australian news, building permits and business inventories will start the week off on Monday. Australia’s February services stats will come in on Tuesday, and the Reserve Bank of Australia (RBA) will hold its March policy decision as well.

Other key data, including Australian growth, trade and retail stats, will come in from Wednesday through Friday.

Surprising developments in geopolitics and risk-sentiment could of course influence the Pound to Australian Dollar (GBP/AUD) exchange rate outlook as well.

 

Key Events

4th March

00:00 Australian HIA New Home Sales

00:30 Australian Building Permits

00:30 Australian Business Inventories

09:30 UK Construction PMI

5th March

Australian Services PMI

03:30 Reserve Bank of Australia (RBA) Policy Decision

09:30 UK Services and Composite PMI

6th March

RBA Governor Philip Lowe Speech

00:30 Australian Growth Rate

7th March

Australian Construction PMI

00:30 Australian Trade Balance

00:30 Australian Retail Sales

8th March

00:00 Australian HIA New Home Sales

 

28th December

00:30 Australian Private Sector Credit

09:30 UK Finance Mortgage Approvals

 

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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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