Hard Brexit Fears Boosted Australian Dollar Pound Exchange Rate
Although the Chinese Consumer Price Index fell short of expectations in December, dipping from 2.3% to 2.1%, this was not enough to dent the Australian Dollar (AUD). Despite this sign of softness from the world’s second largest economy investors were more concerned by the strong uptick in producer prices. As a result base metal prices were given a fresh boost, helping to shore up the ‘Aussie’ on Tuesday.
The Australian Dollar Pound (AUD GBP) exchange rate benefitted further from continued speculation over the prospect of a hard Brexit. Comments from Theresa May that the government was not looking to hold onto ‘bits’ of its EU membership gave rise to fresh fears that the UK’s current level of access to the single market could be lost, a potentially severe blow to the financial sector. In the absence of any major UK data there was little reason for investors not to sell out of the Pound, extending the gains of the AUD GBP exchange rate.
AUD GBP Exchange Rate Forecast: Rising Consumer Confidence to Boost ‘Aussie’
Later today the ‘Aussie’ could find further support from January’s Westpac consumer confidence index. The measure is expected to show that domestic optimism continued to improve at the start of the year, in line with yesterday’s unexpectedly strong ANZ Roy Morgan weekly consumer confidence index. While the ultimate impact of the data is likely to be fairly limited a positive showing could still shore up the antipodean currency in the near term, suggesting that the economy remains in robust health.
Demand for the Pound could pick up in response to November’s UK industrial and manufacturing production figures, with a modest rebound in output forecast. Signs that the economy has continued to perform well in the wake of the Brexit vote may dent the GBP AUD exchange rate. However, with the UK trade deficit expected to have widened further and any particular clarity on the government’s Brexit plan still lacking Sterling is likely to remain biased to the downside.