AUD/GBP Exchange Rate Slides Ahead of Brexit Meetings
The Australian Dollar Pound (AUD/GBP) exchange rate nosedived late on Monday as markets welcomed the restart of Brexit talks between the UK and EU.
At the time of writing AUD/GBP is down around 0.5% from the week’s opening levels, with the pairing closing in on the 20-month low struck at the end of March.
Pound (GBP) Strengthened by Positive Brexit Sentiment
The Pound is accelerated against the Australian Dollar and the majority of its other peers during the European session on Monday due to the latest development in the Brexit process.
Sterling sentiment was buoyed ahead of technical meetings between the UK and EU later this week, with analysts hopeful that some positive progress will be made.
Brian Martin, head of global economics at ANZ said;
‘Negotiations …have the potential to appear difficult at times which may weigh on Sterling. Nevertheless, there is strong vested interest on both sides to agree on a workable trade deal.’
Combined with speculation that this week’s UK data will build the case for a rate hike from the Bank of England (BoE) next month, the Pound has got off to a strong start this week.
At the same time the Australian Dollar found little support at the start of this week as iron ore continues to struggle to find any notable gains.
Iron ore has traded in a narrow range over in April, moving less than $2 a tonne in either direction since the end of March, with analysts warning that their outlook sees chance of this changing in the near future.
AUD/GBP Forecast: Sterling to Find Support from UK Wage Growth Figures?
Looking ahead the AUD/GBP exchange rate may tumble during the European session on Tuesday following the publication of the UK’s latest employment figures.
While investors are likely to welcome another robust report in terms of employment, the main focus will likely be on the accompanying earnings figures, with economists forecasting that wage growth will have ticked up from 2.8% to 3% in February.
This is likely to prompt the Pound to soar as its bolsters expectations of a rate hike from the BoE in May and possibly raises the question of whether there is enough slack in the UK’s labour market for another hike later in the year.
Meanwhile the Australian Dollar may trend higher in the second half of the week with the release of Australia’s own labour report.
Analysts predict that Australia’s workforce will have expanded by around 20,000 in February possibly helping the AUD/GBP exchange rate to claw back some of its losses.