Update: Pound Sterling Exchange Rates Riding High, GBP/AUD Holds One-Year High
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains at an over one-year high despite some less-than-impressive UK data.
The interbank GBP/AUD exchange rate is currently in the region of AU$1.7788, up 0.3% on the day’s opening levels.
Sterling was unfazed by the news that the GfK consumer confidence index declined from -10 to -12 and also registered gains against a number of the other majors.
Update: Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Extends Gains
After jumping to a 14-month high, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate extended gains as the European session progressed.
The interbank rate hit a high of AU$1.7726, up almost 0.9% on the day’s opening levels.
Pound Sterling (GBP) Exchange Rates Surge as Investors Welcome Brexit Bill Offer
The Pound to Australian Dollar (GBP AUD) exchange rate touched a new 14-month high this morning following the news that the UK government would be willing to offer a larger financial incentive as part of its exit agreement with the EU.
GBP AUD is currently at around AU$1.7663, up 0.53% from its opening levels of around AU$1.7573.
Pound Sterling (GBP) sentiment is soaring this morning as markets react positively to reports that the UK government would be willing to pay up to €50bn to help meet its financial obligations to the EU.
Investors are hopeful that this will help re-energise Brexit negotiations, which have stalled in recent weeks as the two sides butted heads on a number of issues, one of which being the size of the UK’s ‘divorce’ bill.
Observers are now a little more optimistic about the chance of ‘sufficient progress’ being made in talks before the next EU summit next month, something that will hopefully allow trade discussions to finally get underway.
Konstantinos Anthis head, of G10 FX Research at ADS Securities, said;
‘Even though the agreement is not yet formal traders are clearly excited by the prospect of progress on this issue. Traders are looking for any positive news in this area as it opens the way for trade negotiations, and are prepared to buy sterling in response.’
However it must be noted that while officials in Brussels are reported to have welcomed the offer there has still not been any final agreement on the size of the UK’s divorce bill.
Australian Dollar (AUD) Exchange Rates Weakened by Strong US Dollar (USD)
The Australian Dollar, on the other hand, found itself struggling in overnight trade on Tuesday part, in thanks, to a modest rise in the US Dollar yesterday.
The US Dollar’s strength came on the back of both some upbeat consumer confidence data and comments from incoming Federal Reserve Chair Jerome Powell, who said that the Fed’s monetary tightening would continue.
Further weighing on the ‘Aussie’ was the continued slowdown in iron ore markets, with prices appearing to stall after racing higher last week.
GBP AUD Exchange Rate Forecast: Can Sterling Hold on to its Gains?
Looking ahead, markets are likely to pay close attention to the EU’s official reaction to the UK’s government’s Brexit bill offer, with the tone of the EU’s response likely to dictate movement in the GBP AUD exchange rate.
While the offer may be a step in the right direction, there are a number of other issues facing negotiations, such as the Irish border and citizens’ rights, both of which could still stall talks.
Meanwhile, Australia will publish its first notable economic data of the week later tonight, with Australian Dollar (AUD) exchange rates likely to weaken further if New Homes Sales contracted again in October.