Pound Australian Dollar Exchange Rate Rangebound amidst Brexit Uncertainty
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range today, as Brexit concerns sap Sterling sentiment.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8505, virtually unchanged from this morning’s opening rate.
Pound (GBP) Sidelined by Brexit Woes
The Pound (GBP) is struggling to make any meaningful gains against the Australian Dollar (AUD) today, in light of fresh Brexit uncertainty.
The UK and EU remain at odds over the Northern Ireland protocol, the row over which has seen European Commission vice-president, Maros Sefcovic, warn over a ‘downward spiral’ in relations.
Speaking before the Commons foreign affairs committee, the UK’s chief Brexit negotiator, Lord Frost said that he did not expect the UK’s post-Brexit relationship to be as difficult as it currently is, and warned that things could become more strained.
Lord Frost, said:
‘It’s reasonable to think it will be a little bumpy for some time because of that.
‘I said last week at a speech at another event that I think those who campaigned for leave would have been surprised to think that the relationship was as relatively difficult as it is now.’
The comments have done little to reassure GBP investors, who fear the row over the Northern Ireland protocol could hurt future trade talks regarding the UK’s all important service sector.
Australian Dollar (AUD) Dented by Risk-Off Mood
At the same time, the Australian Dollar (AUD) is on the back foot today, amidst a weakening of market risk appetite.
This risk-off mood has been partly attributed to a rebound in the US Dollar (USD), which has been underpinned by rising US Treasury yields and tailwinds from last week’s hawkish turn by the Federal Reserve.
Further dampening the appeal of the ‘Aussie’ today are signs that trade tensions between Australia and China are continuing to escalate.
Earlier this week Australia lodged a formal complain to the World Trade Organisation (WTO) against China, in response to Beijing’s imposing of 218% tariffs on Australian wine last year.
This is the latest spat between Australia and its largest trading partner, which AUD investors fear could hurt Australia’s economic recovery this year.
Pound Australian Dollar Exchange Rate Forecast: Robust Growth in UK Service Sector to Boost Sterling?
Looking ahead to tomorrow’s session, the Pound Australian Dollar exchange rate could be propped up by the publication of the UK’s latest PMI figures.
June’s preliminary figures are forecast to report growth in the UK’s private sector continued to expand, with the services PMI potentially catapulting Sterling higher if it beats the 24-year high struck in May.
In the meantime, the publication of Australia’s own PMI figures could help to boost the appeal of the ‘Aussie’, as analysts predict private sector activity will have also improved this month.