Pound Australian Dollar (GBP/AUD) Exchange Rate Trims Gains following OPEC+ Decision

Pound Australian Dollar (GBP/AUD) Exchange Rate Eases Off Today’s Highs

(Updated 16:30, 02/12/21) The Pound Australian Dollar (GBP/AUD) exchange rate has trimmed some of today’s gains this afternoon, with no clear catalyst for the movement.

The drop in GBP/AUD seems to have been due to a slightly stronger ‘Aussie’ rather than a weakening Pound (GBP). One factor affecting the Australian Dollar (AUD) could have been the decision from the oil cartel OPEC and its allies, who decided today to go ahead with planned increases in oil output despite cooling crude prices.

The move signals some confidence from the group that oil demand will remain high, which may have cheered markets. However, OPEC+ also chose to keep today’s meeting in session. This way, they’re poised to change policy if they deem it necessary.

Oil prices slumped ahead of the meeting but have since been slowly recovering. With AUD linked to oil and other commodities, the movement in GBP/AUD could have been a reaction to the news.

GBP/AUD is currently trading at AU$1.87365. This is about 0.26% lower than today’s high of AU$1.87852 but still up from the session’s opening levels.

Original article continues below:

Pound Australian Dollar (GBP/AUD) Exchange Rate Gains on Pharmaceutical Investment News 

The Pound Australian Dollar (GBP/AUD) exchange rate has climbed higher today following news of increased investment in the UK’s pharmaceutical sector, particularly in vaccine production. 

Meanwhile, the ‘Aussie’ is under pressure after Australia’s trade surplus fell to a five-month low. 

Pound (GBP) Strengthens as Vaccine Investment Announced 

The Pound (GBP) has gained against the Australian Dollar (AUD) amid reports that the UK will invest billions into vaccine production

Speaking to BBC Radio 4’s Today programme, the Science Minister George Freeman said that the UK is entering a private-public partnership which involves investing £500m in genomic sequencing and surveillance of coronavirus variants. The UK will invest another £5bn in NHS health research and vaccine manufacturing. 

This adds to the news overnight that the biotechnology arm of Japanese company Fujifilm will be pumping £400m into its factory in Teesside, which makes Covid vaccines, in one of the largest investments in UK pharmaceutical manufacturing for decades. 

The money will add an estimated 350 jobs to the factory while tripling its cell culture capabilities, increasing gene therapy production capacity by ten, and enabling the production and delivery of mRNA technologies, which manufacturers use to make the Pfizer/BioNTech and Moderna Covid vaccines. 

GBP investors are cheered by this boost to the UK’s pharmaceutical sector, with the Pound gaining ground today. 

Australian Dollar (AUD) Slips as Trade Surplus Shrinks 

Meanwhile, the Australian Dollar is struggling following last night’s disappointing balance of trade figures. 

Although Australia’s latest trade data printed slightly above forecasts, it still revealed that the country’s trade surplus in October had edged down to its lowest level in five months. The report also contained downwardly revised figures for September’s trade. 

The narrowing surplus came as global demand dwindles, commodities prices fall, and many countries face further waves of coronavirus infections. 

Exports fell to AU$43.05bn, their lowest level in five months, while imports dropped to a six-month low of AU$31.83bn. 

In addition, the ongoing uncertainty around the Omicron Covid variant continues to weigh on the risk-sensitive ‘Aussie’. Although many hope the new strain may be milder than other variants and that the current vaccines will still offer protection, markets are understandably muted. As such, investors are less likely to place bets on riskier currencies, such as AUD. 

GBP/AUD Exchange Rate Forecast: Omicron Uncertainty to Persist 

Looking to the rest of the session, GBP/AUD could waver as markets remain jittery over the new Omicron variant. Any positive news could help improve risk appetite, boosting the ‘Aussie’, while negative developments may dent AUD further. 

Tonight the Australian Dollar could get a boost. Economists expect the final services PMI for Australia to confirm an increase in service-sector activity. 

Samuel Birnie

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