Pound to Australian dollar exchange rates have rallied higher this week with rates for the GBP AUD pair breaking over 1.78 and creating a good short term window of opportunity for those looking to buy Australian dollars. Australian unemployment data released yesterday arrived weaker than expected with a small rise in the headline number.
Unemployment down under now sits at 5.1% which is slightly worse than the 5% that was expected, something that will be picked up on by the Reserve Bank of Australia. The central bank has hinted that interest rates may need to rise in 2019 although the economic data will very much dictate whether or not this happens. Any signs of a slowdown will almost certainly put the Reserve Bank of Australia on the defensive which could result in Australian dollar weakness.
GBP vs AUD on the whole is on a weaker footing as result of the ongoing Brexit uncertainty in the UK. However the deadline of 29th March 2019 is fast approaching and a parliamentary vote to be held 14th January 2019 will dictate the direction of travel for the pound. If Theresa May finds herself able to get this deal through parliament then the pound could see some major gains. The reality at the moment is that this is highly unlikely and an uncertain period could like ahead. With no concessions being offered by the EU the deal is likely to be voted down over concerns for the Irish backstop which currently is not time limited.
The other big factor for GBP vs AUD is what happens between the US and China with regards future trade. Tensions are fraught at the moment with allegations of corporate espionage in the technology sector. Although further tariffs on Chinese goods have been paused there is every chance that all of China’s goods could face US trade tariffs, something that will be of concern for the Australian dollar. Any slowdown in global growth could see problems for the Australian economy which may be adversely affected.
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