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GBP/AUD Suffers from Renewed Brexit Angst despite Simmering Trade Tensions

Last week’s high: AU$1.8705

Last week’s low:  AU$1.8509

 

Pound Sinks as UK Political Turmoil Rears its Head Again

Last week the Pound fell almost two cents against the Australian Dollar as political tensions once again hit the UK and markets began to price in the increasing likelihood of a no-deal Brexit occurring.

On Friday it was revealed that Brexit talks between the Conservatives and Labour had broken down, coming only a day after Theresa May’s hand was forced by the 1922 Committee of Tory backbenchers resulting in her declaring that she would set out a timetable for her departure sometime after the latest vote in early June.

The Pound weakened in the GBP/AUD pairing despite mounting expectations that the Reserve Bank of Australia may soon act to cut interest rates following some mixed data.

 

AUD Outlook: Politics and Risk Sentiment in the Driving Seat this Week

Following this weekend’s Australian general election, the main driving factor for the Australian Dollar at present is risk sentiment related to the deepening crisis between China and the US.

The two economic giants are at loggerheads over trade and the status of the Chinese telecoms giant Huawei, which the US effectively banned from operating on American soil last week.

We may get to hear more about this overnight when RBA Governor Philip Lowe delivers a speech which could give a clue as to the direction of Australian monetary policy based on the outlook in the new risk environment.

Otherwise, UK politics is likely to continue to drive the GBP/AUD pairing, with this week’s approaching EU elections slated to weigh heavily on Sterling sentiment.

 

Key Events

21st May

02:30   AUD RBA Meeting Minutes

n/a       GBP Inflation Report Hearings

22nd May

01:30   AUD Westpac Leading Indicator (April)

09:30   GBP Retail Price Index (April)

09:30   GBP Producer Price Index (April)

09:30   GBP Consumer Price Index (April)

24th May

09:30   GBP Retail Sales (April)

 

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

 

Alastair Archbold
Currency Trader
T: 01442 892 062

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