GBP/AUD Exchange Rate Stable Amidst Brexit Uncertainty
The Pound to Australian Dollar (GBP/AUD) exchange rate is mostly rangebound this morning as markets reflect on the suspension of Brexit talks between the UK and EU.
At the time of writing the GBP/AUD exchange rate is trading at around AU$2.0125, virtually unchanged from from this morning’s opening levels.
Pound (GBP) Mixed as Brexit Talks in ‘Deep Freeze’
The Pound (GBP) is holding steady against the Australian Dollar (AUD) this morning as reports suggest the existing timetable for UK-EU trade talks have been ditched in light of the coronavirus crisis.
With more pressing issues to deal with and with travel greatly restricted, planned negotiating rounds on the UK’s future trade relationship with the EU have been suspended indefinitely.
While video-conferencing has reportedly been tried, the European commission said in a briefing on Thursday this had so far proven ‘impossible’.
The delay to talks is worrying for GBP investors as so far the UK government appears to still be aiming to end the Brexit transition period at the end of the year, and the loss of a month or more of negotiations will eat into what many analysts already believed was an unachievable timetable for securing a new trade deal.
On top of this EU sources suggest the UK is still yet to table a comprehensive text outlining it aims on significant issues.
A senior EU official is reported to have said:
‘The first big difference is that we have a fully fledged proposal in line with the political declaration while the Brits have only tabled a few things, much less than we expected’
‘The scope is much narrower than we had thought it would have been and that makes it difficult to work with. That’s the basic problem.’
GBP investors fear that the UK is currently on track for a no-deal Brexit, which on top of the disruption caused by the coronavirus crisis could prove catastrophic for the UK economy.
Australian Dollar (AUD) Buoyed by Easing Fears of Global Recession
Meanwhile, the Australian Dollar (AUD) has found support this morning as concerns over an imminent global recession are fading in light of massive stimulus efforts from governments around the world.
Market sentiment has been particularly buoyed by a €2.2 trillion US economic stimulus package which markets hope will help to limit the economic shock of the coronavirus on the US economy, just a day after it announced a record 3.2 million American’s signed up for unemployment benefits last week.
However, the ‘Aussie’s gains still proved limited in the face of ongoing uncertainty about long the coronavirus crisis could go on for.
GBP/AUD Exchange Rate Forecast: More Coronavirus Volatility Inbound?
Looking ahead, expect to see more volatility in the Pound to Australian Dollar (GBP/AUD) exchange rate next week as the coronavirus crisis continues to dominate market sentiment.
For Sterling this could prove a particular headache as the number of reported UK cases appears to be gathering pace, with GBP investors fearing there could still be some ways to go before the local coronavirus outbreak peaks.
Meanwhile, AUD investors will be paying close attention to data coming out of China in the week to come as they seek to assess the potential repercussions a slowdown in its largest trading partner could have for Australia’s export driven economy.