Uncertain week ahead for Sterling Australian Dollar exchange rates (Tom Holian)

Could this Key Week for Brexit Negotiations Impact AUDGBP?

Sterling Australian Dollar exchange rates have dropped by as much as 30 cents since the Brexit vote but have started to creep up slowly since the appointment on new Prime Minister Theresa May.

However, yesterday’s data release for the UK’s Purchasing Manager’s Index showed a fall in economic activity to its lowest level since 2009.

The figures came out at 47.7 and with anything below 50 represents contraction the data was rather alarming and this caused Sterling exchange rates to fall against all major currencies.

On Wednesday morning this could be the most volatile day all month for GBPAUD exchange rates.

We begin the morning with inflation data for Australia and if worse than expected this could influence the RBA to cut interest rates at their next meeting and therefore you would expect to see AUD weakness vs Sterling. The next meeting for the Reserve Bank of Australia is due on 2nd August.

However, only a few hours later the UK releases UK GDP data for the second quarter.

As this data will include the Brexit period I think this could come out worryingly low so any gains for Sterling could be quickly eroded by the announcement.

Indeed, with manufacturing and industrial production data in the UK at 5 year lows during the second quarter the GDP could highlight the negative view of the economy at the moment.

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