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After opening last week at the level of 1.7678, GBP/AUD plummeted and briefly touched on a low of 1.7295 amid UK political fears. GBP/AUD recovered over half of its weekly losses however, closing the week at 1.7530. On Monday morning, fresh market risk-aversion made it easier for GBP/AUD to trend closer to the level of 1.7586. Despite broad market uncertainty about how the Brexit process could unfold, the volatile Pound edged higher against a weaker Australian Dollar. Investors sold the relatively risky trade-correlated Australian Dollar, amid market concerns that global growth is slowing. Weaker data in China, Australia’s biggest trade partner, has also weakened the ‘Aussie’.

With PM Theresa May winning the vote of no-confidence, the Pound Sterling to Australian Dollar (GBP/AUD) was able to continue trading in the region of $1.75. Data published overnight showed that Australian consumer inflation expectations rose from 3.6% to 4.0%.  With 158 Conservative MPs reportedly prepared to support Theresa May in the no confidence vote on Wednesday evening the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate found fresh support. Investors were encouraged by the prospect of an end to the political uncertainty that has gripped markets, at least for the time being, even as worries over Brexit remain. 

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The Tories have triggered a vote of no confidence in Theresa May, which causes further uncertainty surrounding Brexit. The 1922 Committee chair, Sir Graham Brady has now received more than the 48 letters required from Conservative MPs for a leadership challenge. Sir Brady has stated there will be a ballot this evening. Over 20 Conservative back benchers have publicly announced their letters of no confidence have been submitted, among those are several prominent figures of the Tory Party. Former Brexit minister Steve Baker and Chair of the European Research Group, Jacob Rees-Mogg. It seems that the cancellation of yesterday’s vote has proved unpopular amongst Tory members and was the cause of the additional letters to the 1922 committee. This does not bode well for Sterling with GBP/AUD now in the 1.73s. May’s hopes for renegotiating the Irish Border deal were dashed yesterday when she travelled to the Hague as news emerged Angela Merkel and Jean Claude Junker both told the PM there would be no re-negotiation on the Irish back stop.