Rates for pound to Australian dollar have found support at the start of this week after a drop off in the GBP to AUD pair at the end of last week. Brexit continues to be the main driver for sterling exchange rates and is creating considerable volatility for the GBP vs AUD pair. The pound has made reasonable gains in recent weeks as the markets remain optimistic that a no deal Brexit appears to the less likely outcome and that there is still hope from all sides that a deal will be reached between the UK and EU. Until some certainty is offered however the pound is unlikely to make any material gains against the Australian dollar. The next important date in British politics is the 14th February where another vote will be held in the House of Commons.
The Reserve Bank of Australia meet this week to discuss interest rates and future monetary policy although expectation is that there won’t be any change in the base rate this time round. Economic data in China is likely to have more sway on the future of the Australian dollar. The ongoing trade war between the US and China continues to raise concerns for the global economy and this ultimately has a knock on effect on the Australian economy and the Aussie dollar.
Manufacturing numbers from the Purchasing Managers Index have disappointed the markets once again and any further deterioration could see Australian dollar exchange rates come under renewed pressure. Services data on the other hand also from the Purchasing Managers Index survey have been steady giving some hope for this sector. Any major market movement is likely to follow from any trade agreement that is reached between the US and Chinese leaders. There are reports that there may be a meeting between US President Donald Trump and Xi Jinping in Vietnam at the end of February. A way forward to break the deadlock in trade negotiations could prove very beneficial for the Australian dollar.
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