GBP/AUD Exchange Rate Bolstered by Brexit Optimism
The Pound to Australian Dollar (GBP/AUD) exchange rate continues to trend higher this morning in response to growing hopes for a UK-EU Brexit trade deal.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7831, up almost 0.3% from this morning’s opening rate.
Pound (GBP) Strengthened by Brexit Deal Hopes
The Pound (GBP) continues to rally against the Australian Dollar (AUD) and the majority of its other peers this morning, amidst hope that a Brexit trade agreement between the UK and EU could be realised in the coming days.
Following on from yesterday’s ‘buzz’ in Westminster that a deal could be close, in a speech to the European Parliament this morning, European Commission President, Ursula von der Leyen, appeared positive on the chances of a deal and that a ‘path to an agreement’ is visible.
'Narrow path' in view for post-Brexit trade deal, says EU chief https://t.co/p0BfmNEUzp
— BBC Politics (@BBCPolitics) December 16, 2020
von der Leyen, said:
‘As things stand I cannot tell you whether there will be a deal or not, but I can tell you that there is a path to an agreement now. The path may be very narrow, but it is there, and it is therefore our responsibility to continue trying.
‘The good news is that we have found a way forward on most issues, but this is now case of us being so close and yet being so far away from each other, because two issues now remain outstanding, you know them: the level playing field and the fisheries.’
However, somewhat tempering the upside in Sterling this morning has been the more cautious tone from the UK, as government sources suggest that, despite some progress, the UK and EU still remain ‘very far apart’ in some key areas.
Australian Dollar (AUD) Supported by Risk-On Trade
At the same time, the Australian Dollar (AUD) has been able to cap its losses against the Pound (GBP) this morning in light of the generally upbeat market mood.
This improvement in market sentiment comes in response to fresh coronavirus vaccine optimism, following the news FDA had deemed Moderna’s vaccine as highly effective and putting it one step closer to given approval for emergency use in the US.
On top of this, growing hopes for another US stimulus package is also feeding into the risk-on tone.
However, the Australian Dollar’s upward momentum appears to have begun to fade at the start of today’s European trading session, as investors temper their aggressive bets ahead of today’s Federal Reserve rate decision.
GBP/AUD Exchange Rate Forecast: BoE 2021 Outlook in Spotlight
Looking ahead to the second half of the week, we may see Brexit take a back seat, as the spotlight turns to the Bank of England (BoE) as it concludes its final policy meeting of 2020.
While the Monetary Policy Committee (MPC) is not expected to announce any policy changes following this month’s meeting, the BoE’s outlook for 2021 will be a key focus for investors.
This could dent the Pound to Australian Dollar (GBP/AUD) exchange rate if the bank’s forward guidance is broadly dovish in tone.
In the meantime, the publication of Australia’s latest jobs report later tonight will be the main focus for AUD investors, with the ‘Aussie’ potentially strengthening if the recent rise in unemployment appears to have tapered off in November.