GBP/AUD Exchange Rate Plummets on New Sunday Brexit Deadline
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.9% today, with the pairing currently trading around AU$1780.
The Pound (GBP) suffered today as significant gaps remain in UK-EU Brexit talks, with Prime Minister Boris Johnson and the European Union setting Sunday as the new deadline to secure a trade agreement.
Ursula von der Leyen, the President of the European Commission, commented last night’s talks:
‘We understand each other’s positions. They remain far apart. The teams should immediately reconvene to try to resolve these issues. We will come to a decision by the end of the weekend.’
However, both sides warned that if there is no deal by Sunday, then there will be no deal.
As a result, UK markets are becoming increasingly concerned that the UK could be headed towards a chaotic exit from the EU at the year-end.
In UK economic news, today saw the release of the UK GDP data for October, which slowed to 0.4% as Covid-19 restrictions limited the economy.
The economy hardly grew at all in October and with the COVID-19 restrictions likely to stay in place for some time, the economy is in for a tough few months. But scope for a “vaccine bounce” in 2021 should allow it to regain its pre-virus level in Q1 2022.https://t.co/e9w9rFHOm9 pic.twitter.com/GR9gc9Za5k
— Capital Economics UK (@CapEconUK) December 10, 2020
However, GBP investors are growing more confident that the Covid-19 vaccine rollout could provide a ‘vaccine bounce’ next year.
Australian Dollar (AUD) Rises as Coivd-19 Vaccine Rollouts Boost Risk Sentiment
The Australian Dollar (AUD) rose today as Covid-19 vaccine rollouts across the UK and with Europe and the US expected to soon follow has boosted risk sentiment.
As a result, the risk sensitive ‘Aussie’ has steadily risen over the past few days, with hopes that the global economy could now begin make steps towards recovery.
In Australian economic news, today saw the release of December’s Consumer Inflation Expectations, which confirmed forecasts and rose by 3.5%.
However, there are some clouds on the horizon for the Australian economy, with tensions between Australia and China causing concern for the nation’s economic stability going forward.
Australia has accused China of undermining their free trade agreement after Beijing initiated a series of actions against Australia’s exports.
Simon Birmingham, Australia’s Trade Minister, commented:
‘We continue to raise issues of apparent potential, discriminatory actions targeted against Australia.’
With China being Australia’s largest trading partner, any disagreements between the two nations tends to prove AUD-negative.
GBP/AUD Forecast: Could Fears of a No-Deal Brexit Continue to Drag Down Sterling This Week?
The Australian Dollar (AUD) will likely head higher this week as Covid-19 vaccine rollouts offer hope of a steady recovery for the global economy.
However, any further signs of conflict between China and Australia over trade would be AUD-negative.
Pound (GBP) investors will continue to monitor Brexit developments this week.
If there are still no signs of a possible post-Brexit trade agreement before Sunday – the deadline for a deal – then we could see the GBP/AUD exchange rate plummet.