- Australian Dollar Pound Sterling Hits 0.6167 – Pound Sterling Australian Dollar hits 1.6207
- Bannon the ‘Barbarian’ Leaves Whitehouse – USD Stumbles, AUD Capitalises
- Iron Ore Soars Higher Monday – AUD Sluggish in Response
The Australian Dollar to Pound Sterling exchange rate fluctuated on Monday as markets continued to react to news of former Chief Strategist Steve Bannon’s resignation.
Bannon’s resignation was officially accepted by US President Donald Trump on Friday, further demonstrating a widening crevasse within the Whitehouse and fostering even more investor anxiety regarding the potential for the Republican Party to deliver on its promises of economic reform.
In addition to Bannon’s resignation, the ‘Greenback’ has been wobbled somewhat by concerns regarding the future leadership of the Fed. The current Chair, Janet Yellen, is expected to leave her position when her term terminates in February 2018, which raises the question: Who will be her successor?
One of the primary contenders is National Economic Council Director Gary Cohn, a candidate that has emerged as the clear front-runner according to a survey by the Association for Business Economics. This news may have added to the US Dollar stumbling this morning, pushing demand back in the favour of the Australian Dollar.
Iron Ore Climbs, Australian Dollar (AUD) Sluggish
The Australian Dollar recovered last week after a jump in commodity prices and a spate of positive domestic data releases. But despite iron ore climbing for its third consecutive session to a multi-month high today, the AUD GBP exchange rate has, so far, been slow to respond.
This could be due to the Pound being bolstered by the release of two Brexit ‘papers’ (the first two of five, overall).
The first of these papers relates to goods, asserting that all goods that already exist on the market should be allowed to remain on said market for sale in both the UK and the EU – that’s without tariff or restriction.
The second calls for a reciprocal arrangement that ensures all confidential documents that exist between the UK and the EU remain confidential after Brexit has taken place.
Whilst these two releases may have been slightly less significant than investors had initially hoped, the Pound was nonetheless bolstered, particularly as the other papers will likely give insight into the UK’s position on the European Court of Justice; a very large sticking point in the previously stagnating Brexit negotiations.
AUD GBP Forecast: 2nd Estimate UK GDP on the Horizon
There are currently no data releases this week that directly pertain to the Australian Dollar, so investors of this pairing will likely be looking to political revelations from both countries, data releases from the UK and the US, and commodity prices, for guidance.
The most notable data release this week for the UK will be their 2nd estimate GDP figures which are due on Thursday.
Currently the year-on-year Q2 figure is estimated to come in at 1.7%, down from the previous 2%. The quarter-on-quarter figure, however, is forecast to rise from 0.2% to 0.3%. If these previous estimates are beaten then Sterling will rise, putting the AUD GBP exchange rate under pressure.
The US is due a number of releases, notably oil inventories and Markit PMI figures on Wednesday, home sales and jobless claims on Thursday and a double-whammy; US durable goods orders and a speech from Fed President Janet Yellen on Friday.
US durable goods orders for July are expected to have dropped to -5.8% from 6.4%, if this materialises then it could well swing things back in the ‘Aussie’ Dollar’s favour as the week comes to a close.