Pound Australian Dollar Exchange Rate Slips amid Improving Market Sentiment
The Pound to Australian Dollar (GBP/AUD) is down at the start of this week following the significant gains made last Friday. This was due to the uncertainty surrounding the new Coronavirus threat, however cautiously optimistic scientific research has improved sentiment.
At the time of writing, the GBP/AUD exchange rate is trading at around AU$1.8633 and is down approximately 0.3%.
Pound (GBP) Weighed On by Brexit Negotiations
The Pound (GBP) is coming under some pressure this morning in response to on-going Brexit talks.
The Northern Ireland protocol negotiations and French-UK disagreements continue to generate high tensions between the UK and EU.
Over the weekend, the French-UK row escalated to new heights leading to UK Home Secretary, Priti Patel, losing her invitation to an important immigration meeting held across the channel.
Labour’s Shadow Home Secretary, Nick Thomas-Symonds, said:
‘[Being disinvited was] a humiliation for a prime minister and home secretary who have completely lost control of the situation in the Channel.
At the very moment when the prime minister needed to be a statesman, what we have seen is a grave error of judgement. This continued blame game is not getting us anywhere.’
Moreover, shifting expectations surrounding the Bank of England (BoE) raising interest rates at its December policy meeting continue to influence movements in GBP. The new variant of coronavirus, Omicron, placed further strain on the Pound at the close of last week’s session as uncertainty over a rate hike from the BoE grew.
Australian Dollar (AUD) Rises as Risk Appetite Returns
The Australian Dollar (AUD) is gaining ground this morning amid improving market risk appetite despite the new strand of coronavirus, Omicron, having reached Australia.
Omicron is largely unknown and has been labelled a ‘variant of concern’ by the World Health Organisation (WHO).
Spokesperson for WHO, said:
‘Omicron has an unprecedented number of spike mutations, some of which are concerning for their potential impact on the trajectory of the pandemic.
The overall global risk related to the new variant …is assessed as very high.
The presence of multiple mutations of the spike protein in the receptor-binding domain suggests that Omicron may have a high likelihood of immune escape from antibody-mediated protection. However, immune escape potential from cell-mediated immunity is more difficult to predict.
Overall, there are considerable uncertainties in the magnitude of immune escape potential of Omicron.’
Australia has made the decision to remain closed to skilled workers and students until the 15th December whilst health organisations learn more about the Omicron variant, following last week’s announcement of easing border control.
Despite this, Australian scientists are cautiously optimistic that they will be capable of gaining the relevant information of how transmissible and harmful the virus is within a week.
GBP/AUD Exchange Rate Forecast: Australian Q3 GDP Set to Dent AUD
Looking ahead, the GBP/AUD exchange rate could make gains following third quarter GDP data from Australia.
Growth between July and September is forecast to have contracted -2.7%, down from 0.7% in the second quarter.
However, the Omicron coronavirus strain could further limit AUD against the Pound as coronavirus fears may dampen the riskier asset’s appeal this week.
The Pound is likely to remain subdued as Brexit continues; the new Covid-19 strain may impacts Sterling, and a speech from Bank of England (BoE)’s Governor, Andrew Bailey, set for Wednesday afternoon, could influence movement.