Pound to Australian Dollar Exchange Rate Jumps amid ‘Aussie’ Pullback
Following weeks of strong performance, the Australian Dollar (AUD) is tumbling today and as a result the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is rising. Still, the pair has only regained a fraction of last week’s losses.
Due to rising market confidence and risk-sentiment, GBP/AUD took another hit last week. GBP/AUD opened the week at the interbank level of 1.85 and shed over three cents throughout the week.
GBP/AUD has recovered around a cent of those losses. The pair trends in the region of 1.82 at the time of writing this morning.
The primary cause of the morning’s gains has been AUD weakness. The Pound’s (GBP) performance on the other hand is middling, due partially to returning Brexit uncertainties.
Pound (GBP) Exchange Rates Lack Drive as Rivals Dominate Focus
The Pound’s (GBP) movement has been more on the mixed side since markets opened this week. Yesterday’s movement was more due to global movements, and today’s movements appear to be more of the same.
Essentially, Sterling is gaining on a plummeting Australian Dollar (AUD). However, it is performing poorly compared to some safer rivals like the Euro (EUR) and US Dollar (USD).
According to Analysts at ING, the Pound’s rebound may not last:
‘Sterling’s gains yesterday were mainly driven by global factors and the appreciation of higher beta currencies. We still see scope for further GBP upside as limited and look for a reversal of the recent EUR/GBP drop as the UK-EU trade deal uncertainty (and its negative implication for the UK’s 2021 growth outlook) weighs on GBP’
Australian Dollar (AUD) Exchange Rates Fall Back as Trade Fears Flare
A long rally in the Australian Dollar (AUD) has come to an end for now. The Australian Dollar was knocked lower across the board today, due to a sudden rise in the market’s trade uncertainties.
Perceived tensions between Australia and China, its biggest trade partner, flared up again. This is because of a comment from China’s Ministry of Education urging students to think twice before studying in Australia.
While hopes of an economic rebound from the coronavirus pandemic persist, it was not enough to keep AUD climbing amid this news.
However, analysts believe that the outlook for market sentiment is still good overall. This may mean that the Australian Dollar’s current weakness is limited. According to Imre Speizer, FX Analyst at Westpac:
‘Economies are smashed, but not smashed as badly as was expected, and I think that’s the key to this whole rally,
The latest high-frequency data shows you that the recovery probably looking more like a V. It’s a relief rally, relief that it’s not as bad as feared.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Rebound May Not Last
Investors are buying the Pound to Australian Dollar (GBP/AUD) exchange rate due to perceived China-Australia trade tensions.
However, overall the market outlook for the global economy and risk-sentiment continues to improve. This is because of signs that economies are bouncing back somewhat from the coronavirus pandemic.
As a result, further signs of improvement could lead to further Australian Dollar strength, especially if trade tensions cool again.
Sterling may also come under increasing Brexit pressure in the coming days and weeks. With June being the deadline for a potential extension of the transition period, Brexit uncertainty is returning.
Overall, the Pound to Australian Dollar (GBP/AUD) exchange rate’s potential for big gains is limited.