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GBP/AUD Unable to Hold onto Highs amid Fresh Brexit Uncertainty

Last week’s high: AU$1.8752

Last week’s low: AU$1.8528

Brexit Uncertainty Helps ‘Aussie’ to Recover from Worst Levels

Last week saw mixed movement in the Pound to Australian Dollar exchange rate. At some points, weak Australian growth data and market risk-aversion made it easier for the Pound to Australian Dollar exchange rate to climb. This helped the pair to touch on an impressive high on Wednesday – the best level since the Brexit vote in 2016.

However, ultimately the Pound was unable to hold its ground as uncertainty over the Brexit process returned towards the end of the week.

Investors had been hoping that the UK government would be able to renegotiate its Brexit plan with the EU to make it appealing enough for it to pass through UK Parliament. However, a lack of progress in talks left investors ultimately betting that the Brexit deal would fail to pass once again, leaving the Pound facing continued uncertainty.

This speculation pushed GBP/AUD lower towards the end of the week, despite the Australian Dollar’s weakness due to poor Australian data and Reserve Bank of Australia (RBA) interest rate cut bets.

 

AUD Outlook: Parliament Brexit Vote Could Decide Future of Brexit Process

The week’s Australian economic calendar will be quieter, but the week’s upcoming UK news could be so influential that it drives the Pound to Australian Dollar exchange rate regardless.

This is because Tuesday will see UK Prime Minister Theresa May’s Brexit agreement return to Parliament for another meaningful vote. The government hopes it has enough support to pass the bill through into law.

However, as domestic support for the bill is not perceived to have changed, it could be blocked again. This would lead to votes on a no-deal Brexit and a potential delay to the formal Brexit date over the following days.

The possibility also remains that the UK government could decide to delay the Brexit vote at the last minute – but with Brexit day mere weeks away this would lead to a plummet in the Pound.

Much of the week’s most notable UK and Australian data will be published on Tuesday and Wednesday. This includes Australian business and consumer confidence data, as well as UK growth data – but both prints are likely to take a backseat to potential Brexit developments.

 

Key Events

11th March

09:30 UK NAB Business Confidence

12th March

UK Parliament Vote on Brexit

00:30 Australian NAB Business Confidence

09:30 UK Trade Balance

09:30 UK Manufacturing and Industrial Production

09:30 UK Growth Rate

13th March

00:30 Australian Home Loans

12:30 UK Spring Budget

15th March

00:00 Australian Consumer Inflation Expectations

 

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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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