The Pound Australian Dollar (GBP AUD) exchange rate tumbled by around a cent this morning following a warning from French President François Hollande that the UK will no longer have access to any EU perks.
In an interview with the Guardian ahead of a summit in Versailles to discuss the future of the Eurozone after Brexit, Hollande reaffirmed his position that the UK could not retain any of its access to the EU.
Hollande also questioned the UK government’s plans to work closer with the US, saying;
‘The UK’s problem is this: it had thought that in leaving Europe it would tie up a strategic partnership with the US. But it now happens that the US is closing itself off from the world. The UK has made a bad choice at a bad moment.’
Sterling sentiment is likely to take a heavy hit this month as Prime Minister Theresa May plans to trigger Article 50 and begin two years of negotiating Britain’s exit from the EU, something that most analysts forecast will have a negative impact on the UK’s economy over the next decade.
Meanwhile, the Australian Dollar was strengthened by modest growth in domestic Retail Sales at the start of the year.
Sales rose by 0.4% in January, in line with market expectations and following a shock contraction of 0.1% in at the end of 2016.
The improvement was largely driven by Australian’s desire to eat out last month, with the Australian Bureau of Statistics (ABS) reporting that cafes, restaurants and takeaway food put in the strongest performance, while unseasonable weather saw clothing sales decline.
While a positive start to 2017, analysts warn that sales are likely to remain subdued this year. As Jo Masters, senior economist at ANZ, explained;
‘We see any significant acceleration in consumer spending as challenging given ongoing weakness in wage growth and high household debt.’
The rise is also unlikely to have much impact on tomorrow’s Reserve Bank of Australia (RBA) policy meeting as economists forecast that interest rates will once again be left unchanged. However the ‘Aussie’ could still rise if the recent uptick in GDP leads to a more Hawkish message from Governor Philip Lowe in his post-meeting speech.
Meanwhile a lull in notable UK data is likely see the Pound waver under growing Brexit pressure.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.61 and the AUD GBP exchange rate was trending around 0.61.
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