GBP/AUD Exchange Rate Falls as Fears of No-Deal Brexit Drags Down Sterling
The Pound to Australian Dollar (GBP/AUD) exchange rate plummeted by -0.8% today, with the pairing currently trading around AU$1.794.
Sterling fell today despite a breakthrough in Brexit debates between the UK and EU concerning fishing rights.
However, talks continue hang in the balance as EU laws remain an obstacle in negotiations.
Clément Beaune, the French European Affairs Minister, commented:
‘[I]n the coming days, we will have to decide either to continue to negotiate or go ahead with no deal. Because if this is the case, it is better to know now than at Christmas.’
As a result, GBP investors have become increasingly jittery as talks between Prime Minister Boris Johnson and the European Commission President Ursula von der Leyen will continue this evening.
Any signs of talks remaining in deadlock would drag down the GBP/AUD exchange rate as a no-deal Brexit appears more likely.
Nonetheless, this week will see the UK rollout a Covid-19 vaccine, which has buoyed hopes for the nation’s economic recovery in the months ahead.
Australian Dollar (AUD) Rises on Positive Risk Sentiment
The Australian Dollar (AUD) has continued to benefit from increasing risk sentiment this week with hopes that a widespread Covid-19 vaccine rollout could significantly bolster the global economy.
Consequently, demand for the risk sensitive ‘Aussie’ has increased.
In Australian economic news, today saw the release of November’s ANZ Job Advertisements, which rose from 11.9% to 13.9%.
ANZ said in its statement that ‘Job Ads are on track to match or even exceed pre-COVID levels by year-end’.
However, renewed tensions between the US and China have begun to cap some of ‘Aussie’s gains today.
Mark Haefele, chief investment officer at UBS, commented:
‘We see further upside with progress on vaccine approvals, the prospect of an additional US fiscal package, and expectations of a more pragmatic and multilateral approach to China from the incoming US administration likely to support markets.’
With China being Australia’s largest trading partner, however, any conflict between the US and China – the world’s two largest economies – is AUD-negative.
GBP/AUD Outlook: Could a Lack of Progress in Brexit Trade Talks This Week Drag Sterling Down Further?
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the latest House Price Index for the third quarter.
Any signs of improvement in Australia’s housing sector would prove AUD-positive.
Tomorrow will also see the release of the National Australia Bank’s (NAB) Business Conditions.
Any improvement in the outlook for Australia’s economy would boost the ‘Aussie’.
However, US-China trade tensions could begin to drag down the risk sensitive Australian Dollar.
Pound (GBP) traders will be awaiting tomorrow’s release of November’s BRC Like-For-Like Retail Sales.
Brexit developments will continue to drive the GBP/AUD exchange rate this week.
Any signs of UK-EU trade talks failing to come to a consensus on a post-Brexit trade agreement would prove GBP-negative.