Since markets opened this week, the Pound to Australian Dollar (GBP AUD) exchange rate has been trending with a downside bias. A lack of progress in UK-EU Brexit negotiations over the past week has led to a surge in fears that time could run out, making a no-deal Brexit appear more likely.
The Australian Dollar has been able to benefit from Pound weakness. As AUD is a currency often correlated to risk and trade, the currency has been appealing as markets become more optimistic about coronavirus vaccine news.
Last Week: ‘Aussie’ Pulled Back from Highs but Brexit Hopes Began to Dampen
The Australian Dollar, boosted by risk and trade-sentiment, took a breather last week. For much of the week, this meant that it was easier for GBP AUD to advance.
The Pound was boosted by hopes that a Brexit deal was hours or days away for most of the week.
However, towards the end of the week it became more evident that a Brexit deal was not all that close after all. This limited GBP AUD gains and the pair only saw slightly advances throughout the week.
Three Things to Watch For This Week
- Brexit Developments
UK and EU officials indicate that Wednesday could be the last chance for a Brexit deal to be made. Will there be a deal or will there be no-deal? The Pound could see sharp gains or losses depending on the outcome.
- Coronavirus Vaccine Developments
Coronavirus vaccines are being rolled out in Britain and will likely hit other nations soon. Market optimism will continue to boost market risk and trade-correlated currencies like the Australian Dollar.
- UK October Datasets
UK trade balance, production and growth results from October will be published on Thursday. While typically influential, these stats could be heavily overshadowed by Brexit developments.
GBP/AUD Outlook
Could the outcome of this week’s UK-EU Brexit negotiations be known in a matter of days? However Brexit unfolds is likely to dominate the Pound to Australian Dollar exchange rate’s movement.