The Pound Australian Dollar (GBP AUD) exchange rate surged by around half a cent at the start of this week’s session over optimism for a Tory-DUP deal.
Sterling (GBP) Sentiment Rises on Prospect of Deal
DUP leader, Arlene Foster has suggested that her party is ‘close’ to finalising a deal with the Conservatives in order to support Theresa May’s minority government.
The deal is expected to see the DUP’s 10 MPs support May’s government providing it with the majority required to push through legislation, after the Conservatives lost seats in the recent election.
Writing in the Belfast Telegraph, Arlene Foster said;
‘I believe we are close to concluding an appropriate agreement with the Conservative Party to support a minority government on a confidence and supply basis.’
With Foster in London on Monday, Markets are hopeful that the formal deal will be completed by the end of the week, helping to stabilise May’s government and shoring up her position in ongoing Brexit negotiations.
Australian Dollar (AUD) Strengthened by Rising Risk Appetite
The Australian Dollar was able to push back against Sterling by mid-morning however as it was supported by a rise in market risk appetite.
Investors appear to have gone risk-on as they await the latest inflation and GDP figures from Europe and the US later in the week.
With iron ore prices also appearing to strengthen market demand for the commodity-correlated ‘Aussie’ soared at the start of the week as investors sought to make a quick profit.
GBP AUD Forecast: BoE Financial Stability Report Ahead
The GBP AUD exchange Rate may struggle to advance much further on Tuesday with the release of the Bank of England’s (BoE) Financial Stability Report tomorrow, with some analysts predicting it will paint a gloomy outlook for the UK over the coming months as Brexit concerns continue to weigh on the economy.
Meanwhile the Australian Dollar may also stumble at the start of the week following a speech by Reserve Bank of Australia (RBA) Deputy Governor, Guy Debelle tomorrow, with the policy maker expected to reaffirm the banks position that concerns over the labour and housing markets would prevent the bank from raising rates in the foreseeable future.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.6784 and the AUD GBP exchange rate was trending around 0.5956.
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