AUD/GBP in Holding Pattern Ahead of Powell’s Testimony
The Australian Dollar Pound (AUD/GBP) exchange rate found little momentum on Tuesday ahead of a key event on the US economic calendar.
At the time of writing AUD/GBP has begun to edge lower by around 0.2%, after previously holding steady for much of the Asian trading session.
Australian Dollar (AUD) Subdued as Investors Await Powell Testimony
The Australian Dollar showed little signs of movement during the Asian trading session on Tuesday as markets stuck caution ahead of Jerome Powell’s first public appearance as chair of the Federal Reserve.
Powell is set to testify in front of the US House of Representatives’ Financial Services Committee early on Wednesday, and is expected to discuss both the Fed’s monetary policy and its economic outlook.
Investors will be watching his testimony closely for any hints about how quickly the Fed may be planning to raise interest rates this year.
With this possibly having a major consequences on the US Dollar (USD) and the wider currency market, many traders choose to shy away from the riskier ‘Aussie’ today.
Jasper Lawler of London Capital Group said;
‘There is still a level of caution among investors over the future of the US economy and monetary policy, which is keeping the market on edge.
‘Therefore, it comes as no surprise that the most relevant event today will be new Federal Reserve Chair Jerome Powell’s appearance before Congress.’
Pound (GBP) Trims Gains on Brexit Uncertainty
Meanwhile after rocketing higher during the European session on Monday the Pound was forced to shed almost of its gains earlier on Tuesday as Brexit concerns began to hang over GBP once again.
Despite a speech from Labour leader Jeremy Corbyn in which he stated that his party would be in favour of staying within a customs union with the EU, it was not enough to allay some of the growing uncertainty surrounding the split.
In fact British International Trade Secretary, Liam Fox categorically dismissed this idea on Tuesday as he suggested that such a deal would be a ‘complete sell-out’ for the UK, much to the dismay of markets.
AUD/GBP Forecast: US Data to Grant the Aussie Some Breathing Room?
Looking ahead the AUD/GBP exchange rate could find its footing over the next couple of days should the latest US economic data help to suppress the US Dollar.
Economists forecast that the latest US Durable goods orders and GDP estimate will both drag on USD, potentially leading to an uptick in risk appetite and consequently the Australian Dollar.
Meanwhile the Pound could find itself struggling in the second half of this week’s session as the UK’s latest PMI figures are expected to show that private sector activity slowed in Britain in February.