The GBP to AUD interbank exchange rate has fallen over the weekend, in part because UK Chancellor of The Exchequer, Savid Javid, has said that he expects the UK and EU to diverge, in the upcoming trade talks.
Speaking to the Financial Times, Mr. Javid said: “There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.”
This has weakened sterling, because up until now, it was hoped that the UK and EU would retain as close regulatory alignment as possible, to maximise imports and exports between the two, and foster economic growth.
US-China Trade Deal
last week, the USA and China finally signed their “first phase” trade pact.
Beijing has promised to buy billions worth of US farm and manufacturing goods, while Washington has stopped calling China a currency manipulator, among other things. Also, the two countries have avoided ratcheting up their tariffs on each other.
This has benefited the Australian dollar, because China is Australia’s closest export partner, and the antipodean nation also trades with the USA. So when there’s good Chinese economic news, this tends to benefit the AUD.
Turning to this week, it’s a bumper week for UK and Australian economic data.
On Thursday 23rd at 00.30 GMT, we’ll learn Australia’s unemployment statistics for December, which are forecast to rise by 0.1%, to 5.3%.
The UK’s “flash” PMIs (Purchasing Managers’ Indices) for this month will go live on Friday 24th at 09.30. Depending on whether the data show a UK post-election bounce or not, this may convince the Bank of England (BoE) to maintain or cut interest rates from their current 0.75%.
If you’re considering buying or selling Australian dollars and would like to compare rates or know more about the factors that could impact your exchange rate, feel free to contact me directly, I look forward to hearing from you.