GBP/AUD Exchange Rate Slips on Brexit Jitters
The Pound to Australian Dollar (GBP/AUD) exchange rate is trending lower this morning as concerns over a lack of Brexit progress undermine the pairing.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8101, down roughly 0.3% from this morning’s opening rate.
Pound (GBP) Undermined by Brexit Deadlock
The Pound (GBP) is struggling to find support this morning as concerns over deadlocked Brexit talks continue to weigh on Sterling sentiment.
As the latest round of trade talks between the UK and EU come to a close later today, it’s clear that little progress has been made, and that there is still a significant gulf between the two sides on a number of key issues.
Another round of trade talks between the U.K. and the EU is wrapping up with little sign of progress https://t.co/aC8oH9W5Sm
— Bloomberg UK (@BloombergUK) June 5, 2020
While the UK and EU are thought to have made some headway on areas such as security co-operation, the two sides remain at odds on issues like fisheries and the EU’s ‘level playing field’.
Michel Barnier, the EU’s chief Brexit negotiator will hold a press conference later today to update the media on the current status of negotiations.
Barnier warned last month talks were at risk a of ‘stalemate’ if a ‘new dynamism’ was not found, a warning which he is likely to repeat today.
Australian Dollar (AUD) Buoyed by Risk-On Trade
At the same time, the Australian Dollar (AUD) is ticking higher this morning as the appeal of the risk sentiment currency has been buoyed by an upbeat market mood.
With more countries emerging from lockdown and economists appearing increasingly optimistic on the chances for a V-shaped recovery in the global economy, a bullish mood as descended on markets in recent weeks, something which has helped propel the Australian Dollar to new multi-month highs.
Helping to extend the ‘Aussie’ recent winning streak on Friday were reports that Australia may be seeking to ease border restrictions to select countries like New Zealand and Japan, helping to restart Australia’s vital tourism industry.
GBP/AUD Exchange Rate Forecast: Dire GDP Reading to Sink Sterling Sentiment?
Looking ahead to next week’s session, the Pound to Australian Dollar (GBP/AUD) exchange rate faces some likely headwinds with the publication of the UK’s monthly GDP reading for April.
Economists are forecasting the UK economy will have shrunk by an astounding 24% during the first full month of lockdown, offering just a hint as to the depths of the recession that the UK now finds itself.
On top of this, GBP investors are likely to continue to wrestle with Brexit concerns, potentially applying even more pressure to the GBP/AUD exchnage rate.
Meanwhile, the Australian Dollar may find some support at the start of the week with the publication of Australia’s latest business confidence index, which is expected to report that sentiment continued to improve last month after striking a record low in March.