High GBP AUD Exchange Rate Volatility Forecast on Next Week’s Debates over Article 50 Bill
The Pound Australian Dollar exchange rate notably fell due to Brexit news last week, while further crucial Parliamentary discussions are set to cause turbulence next week.
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GBP AUD Exchange Rate Worsened by Brexit Bill, Major Australian Dollar Support from Trade Stats
From January 30th to February 3rd, the Pound fell against the Australian Dollar in a dramatic fashion, crashing from a starting rate of 1.66 to a closing 1.63 by Friday.
This slump in demand followed the official approval of a bill that allows the Government to trigger Article 50 to take the UK out of the EU.
The bill is still not set in stone, but the majority Commons approval on Wednesday night signified a clear step towards Brexit finality, as well as a possible ‘Hard Brexit’ depending on the circumstances.
This aspect severely weakened the Pound and lowered confidence in the UK’s economic future, despite the Bank of England (BoE) revising up growth forecasts on Thursday.
Notable Australian news was mainly focused around the December trade balance, which provided a heavy dose of support to the Australian Dollar when it showed a surplus rise from 2.04bn to 3.51bn on Thursday.
Pound Predicted to Crash Next Week if Article 50 Bill Amendments Run into Trouble
Next week is not expected to be as crammed with UK data as the previous one, with the main economic announcements being limited to Friday.
As well as December’s trade balance coming on Friday, the Pound is also expected to be moved by construction, manufacturing and industrial figures for December on the same day.
With no forecasts made for these releases yet, it is worth instead looking to Monday and Tuesday’s planned Commons debates over the Article 50 bill.
As the bill is now at its ‘committee stage’, MPs can debate any suggested amendments and attempt to implement them, though it remains to be seen just how many Conservative MPs will be in support of such a measure.
Following this sideshow, Wednesday will bring another vote on the bill, which could again weaken the Pound if a majority approve it, given that another solid step towards Brexit will have been taken.
Next Week’s Key Australian News: Sales Figures, RBA Rate Decision and Business Confidence
Looking ahead to the coming week, the Australian Dollar may be able to climb significantly against the Pound on Monday, Tuesday and Friday, when retail sales figures, a Reserve Bank of Australia (RBA) interest rate decision and the NAB business confidence figure are due.
Previously, sales printed at 0.2%, the RBA left interest rates at 1.5% and business confidence was at a score of 6 points.
Forecasts have been mixed about how the RBA will manage interest rates in 2017, with forecasts for the incoming decision being that it could just as well be hiked as it could be cut.
Recent GBP AUD Interbank Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.63 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.61.