John From Moneycorp

The Pound vs Australian dollar

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    Pound looking to end the week on a high

    After some difficult weeks, the pound looks to be ending the week on a high, rising against most major currencies.

    Positive retail sales in the UK and snippets of good news on the Brexit front this week appear to be contributing from the pound’s perspective.

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    The big news was on Friday last week as Britain and the EU came to an agreement. EU President Jean-Claude Juncker confirmed that sufficient progress had been made to move on to trade talks between the UK and the EU.

    The latest talks provided some resolution on the matter of the Irish border and reassurance of EU citizens’ rights.

    Following the announcement, there has been a lot of scrutiny on the Irish border issue and how, in fact, this will be resolved. 
     

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    Sterling soars

    The British pound has accelerated to the front of the fleet. Although the UK employment data were constructive, they were not remarkable enough to justify the pound's progress: Investors were buying sterling because it was going up.

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    Pound boosted today.

    The Bank of England (BoE) Monetary Policy Committee (MPC) voted unanimously to maintain the interest rate at 0.5%. There were hints that rate rises would be on the cards for the future as the Bank of England upgraded forecasts for UK growth from 1.6% to 1.8% for this year. If the economy progresses as forecast, the Monetary Policy Committee highlighted that “monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period”.


     

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    Latest currency round up is below – thanks.

    The Australian economic data came and went without fuss.  There weren't many of them and they were not hugely important.  Private sector lending was just about on target, private capital spending fell slightly in the fourth quarter and January's new home sales were disappointing.  The main downward pressures on the Aussie came from the United States, first because US interest rates could rise more quickly than previously thought and second because the president intends to impose steep taxes on imported steel and aluminium.  Investor fear that those tariffs and retaliatory measures by other countries will be bad for trade and bad for the Aussie.  The currency lost two thirds of a US cent but added half a cent against sterling.

    The pound's (perennial) problem was Brexit talk.  This time it was the EC president and two former prime ministers what weighed in against the government's strategy.  The prime minister will do her best to defend it in a speech this Friday.
     

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    Yesterday, sterling surged with news that Michel Barnier and David Davis, EU and UK Brexit negotiators respectively, are moving closer to an agreement on transitional deal ahead of the EU summit at the end of the week.

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