The pound to Australian dollar exchange rate has held firm after gains seen this week, presenting those buying Australian dollars with a better opportunity despite stronger economic data from Australia. Australian retail sales for February rose 0.8% provided a boost for the high street and highlighting stronger consumer confidence. Specifically department stores, clothing and household goods all performed suggesting the average Australian is still happy to spend on the high street.
At the same time Australia recoded a record trade surplus for February also adding further confidence to the economy at a time when risks to the growth outlook down under have been highlighted. Australian exports arrived at a record $40 billion helping boost the trade surplus to $4.8 billion in February which is the highest seen since 2016. The surplus was largely driven by a rise in commodity prices in particular the price of iron ore.
GBP vs AUD – Search for Brexit Agreement Continues
Interbank exchnage rates for GBP to AUD remain above 1.85 for the pair although high volatility should be expected in these coming days. The ongoing Brexit saga continues to dictate the direction of travel for GBP vs AUD. Last night saw the government defeated on the Cooper amendment to block a no deal Brexit.
The government must now ask for extra time to go back to the EU to request an extension to Article 50 whilst cross party discussions continue between both Labour and Conservative parties. Initially progress appeared to be made yesterday in a sign that talks have been going well although the rhetoric is much cooler as of this morning. Any deal will likely depend on whether there is a solution to stop freedom of movement which was one of the important factors in the 2016 referendum.
We could see considerable market reaction for GBP AUD rates as statements are made from the relevant parties on how the process will unfold. Although the prospect of a no deal has been reduced it has been widely reported that the government could request that the rejection of no deal is disallowed. The government could approach this by requesting the monarch rejects these proposals which have effectively moved power away from the government to parliament. Such an outcome if it came to it could see a sharp sell off in sterling.
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