Pound Australian Dollar Exchange Rate Muted as Upcoming EU Summit in Focus
The Pound Australian Dollar (GBP/AUD) exchange rate is stuck in a narrow range this morning, as market brace for the EU’s vaccine summit later this evening.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8004, virtually unchanged from this morning’s opening rate.
Pound (GBP) Subdued as Markets Fears EU Could Impose Vaccine Export Controls
The Pound (GBP) is struggling to find direction against the Australian Dollar and the majority of its other peers this morning, as investors brace for a virtual EU Summit of leaders later this evening.
The summit is set to be dominated by the EU’s vaccine policy as EU leaders seek to bolster supplies and speed up the rollout.
As part of this EU leaders will deliberate upon a proposal from the European Commission to place export controls on vaccines, a move which GBP investors fear could impact supply to the UK.
Michael Hewson, chief market analyst at CMC Markets UK, comments:
‘Tensions between the EU and UK still remain fairly elevated, despite efforts to cool the narrative, while the recent comments from Thierry Breton, the EU’s internal market commissioner, accusing the UK of vaccine nationalism still suggest the potential for a misstep, as feelings continue to run high, particularly on the EU side, where the sense of grievance remains especially elevated.’
Should the EU opt to restrict vaccine exports in any capacity then we can expect the Pound to take a significant hit as this will disrupt the UK’s vaccination programme and potential lead to delays in reopening the economy.
Australian Dollar (AUD) Sidelined in Risk-Off Trade
Meanwhile, after mounting a modest recovery overnight thanks to some profit taking in the US Dollar (USD), the Australian Dollar (AUD) finds its recovery capped by the prevailing risk-off mood.
This is partly down to ongoing tensions over vaccine supplies, but also comes in the face of rising US-China tensions and concerns over North Korea’s latest ballistic missile test.
On the other hand the prospect of additional US stimulus and hopes for a robust global recovery are extending some support for the ‘Aussie’ today.
Pound Australian Dollar Exchange Rate Forecast: Upbeat UK Retail Sales to Bolster Sterling?
Looking ahead to the end of this week’s session, the Pound Australian Dollar exchange rate may extend its recent rally with the publication of the UK’s latest retail sales figures.
Economists are forecasting retail sales will have rebounded strongly last month, with expectations for sales growth to have jumped from –8.2% to 2.1%, which if correct could see GBP/AUD retest its recent highs.
Meanwhile, in the absence of any notable AUD data releases, any movement in the ‘Aussie’ is likely to remain driven by market sentiment.
This could lead to further weakness in the Australian Dollar on Friday, as ongoing concerns over vaccine supplies and rising geopolitical tensions are likely to dampen market risk appetite.