GBP/AUD Exchange Rate Rangebound as Downing Street Lowers Demand on Fish Catches in Brexit Talks
The Pound to Australian Dollar (GBP/AUD) exchange rate held steady today, with the pairing currently trading around AU$1.804.
The Pound (GBP) held steady today following news that Downing Street had lowered its demands on fish catches, according to the European Union (EU).
As a result, there has been a glimmer of hope that the UK and the EU could secure a post-Brexit trade agreement, if the two sides come to a compromise in the coming weeks.
An EU diplomat commented:
‘We are quickly approaching a make-or-break moment in the Brexit talks. Intensive negotiations are continuing in London. As of this morning it is still unclear whether negotiators can bridge the gaps on issues like level playing, governance and fisheries.’
Any signs of progress in UK-EU trade talks, however, would prove GBP-positive.
In UK economic news, today saw the release of the latest UK Services PMI for November, which beat forecasts and rose from 45.8 to 47.6.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, was more hopeful that the services sector could improve next year, saying:
‘We can only hope that businesses can batten down the hatches and with grit and determination, get through the next few months. It could be spring until a more sustainable recovery appears, buoyed up by vaccine hopes and when lost workforces can return again.’
Australian Dollar (AUD) Steady as Coal Exports Increase Amid Australia-China Conflict
The Australian Dollar (AUD) held steady today following the release of October’s Australian Exports data, which beat forecasts and rose by 5.4%.
Australia’s iron ore exports mainly to China rose by 14% in October, owing to an increase in price.
However, Australia-China trade relations have become strained in recent months, leaving many ‘Aussie’ investors concerned for Australia’s economy going forward.
Ben Udy, an economist at Capital Economics for Australia and New Zealand, commented:
‘The risks to overall trade continue to mount. Given the headwinds to exports we still think [Australian] import growth will outpace export growth in the coming months.’
With the row between China and Australia continue to escalate, following an official Chinese Twitter account sharing a ‘fake’ image accusing Australia of war crimes in Afghanistan, Australian markets are remaining cautious.
Meanwhile, Australia’s Home Loans data for October fell from 6% to 0.8%, sparking concern for Australia’s housing market as the year draws to a close.
GBP/AUD Outlook: Australian Retail Sales in Focus
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of October’s Australian’s Retail Sales.
Any signs of Australia’s retail sales suffering in October could drag down the AUD/GBP exchange rate.
Tomorrow will also see the release of the UK’s latest UK Construction PMI for November. If the UK’s construction sector shows any signs of recovery last month would be GBP-positive.
Brexit developments, however, will continue to drive the GBP/AUD exchange rate for the rest of this week.
Any indications that UK-EU trade talks are struggling to form a consensus on a post-Brexit trade deal would prove GBP-negative.