Pound Australian Dollar Exchange Rate Tumbles despite ‘Aussie’ Weakness
The Australian Dollar (AUD) was a little weaker today, but the Pound Australian Dollar (GBP/AUD) exchange rate still trended lower. Investors have been selling the Pound (GBP) on fresh Brexit uncertainty and Bank of England (BoE) anticipation.
Last week saw mixed movement in GBP/AUD. The pair opened the week at the level of 1.8000 and attempted to climb, before ultimately shedding half a cent and closing at the level of 1.7941.
GBP/AUD continues to see mixed movement this week. An advance attempt yesterday was short-lived as GBP/AUD trends lower in the region of 1.7900 at the time of writing.
Thursday’s session will be vital for the Pound Australian Dollar exchange rate outlook. Australian job market data and the Bank of England’s policy decision could cause big movement if they surprise.
Pound (GBP) Exchange Rates Dampened by Fresh Brexit Tensions
Since the post-Brexit deal was implemented at the beginning of the year, Brexit has largely faded into the background for Pound investors. However, occasional flaring tensions between the UK and EU still hit the Pound from time to time.
The EU will reportedly take legal action against the UK for a breach in the Northern Ireland protocol.
This fresh uncertainty, combined with anticipation for the Bank of England (BoE) policy decision later in the week, are dampening the Pound’s broad appeal today.
According to Kit Juckes from Societe Generale:
‘Now, with the EU taking the UK to court over unilateral decisions about the border with the EU, recent Sterling longs are a bit more nervous.’
Australian Dollar (AUD) Exchange Rates Mixed despite Generally Optimistic RBA
The Reserve Bank of Australia (RBA) published its latest meeting minutes report today. The report continued to show general optimism about Australia’s outlook and potential for recovery.
According to the report:
‘In Australia, the economic recovery was well under way and had been stronger than expected previously.
The December quarter GDP data were expected to show that the recovery remained on track.’
Despite the optimism though, the Australian Dollar’s strength has been limited. AUD has struggled to capitalise on GBP weakness as investors are hesitant to keep buying the recently strong ‘Aussie’ even higher.
Pound Australian Dollar (GBP/AUD) Exchange Rate Outlook to be Driven by Thursday News
The Pound to Australian Dollar exchange rate will likely continue to be driven by market mood and speculation until later in the week.
Data and news expected on Thursday, however, could have a big impact on the GBP/AUD outlook.
Thursday will see the publication of Australia’s February job market report. As Australia’s job market is a key barometer of Australian economic health, this data could have a big impact on Australia’s outlook if it surprises.
The Bank of England’s (BoE) March policy decision is also set for Thursday. The bank is expected to leave policy frozen, but if the bank remains optimistic overall on Britain’s recovery outlook then the Pound may be able to sustain recent strength.
Of course, a more dovish BoE could be a surprise to Sterling and would hit the Pound Australian Dollar (GBP/AUD) exchange rate lower instead.
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