GBP AUD Exchange Rate Muted on Northern Ireland Political Concerns
The Pound Australian Dollar (GBP AUD) exchange rate is rangebound so far this morning. The pairing is struggling to find any strong directional bias amidst political uncertainty in Northern Ireland.
At the time of writing the GBP AUD exchange rate is trading at around AU$1.8997, virtually unchanged from this morning’s opening levels.
Pound (GBP) Subdued amid Northern Ireland Crisis
The Pound (GBP) is sidelined this morning as a result of growing concern over the political situation in Northern Ireland.
The Democratic Unionist Party’s (DUP) Paul Givan resigned as first minister of Northern Ireland late last week in protest of the Northern Ireland protocol. The controversial protocol requires checks on British goods arriving in Northern Ireland. Its critics claims it is damaging the country’s place in the UK.
The DUP refuses to take part in Northern Ireland’s power-sharing government until the protocol is dropped.
NI agriculture minister, Edwin Poots, told the Northern Ireland Assembly:
‘Someone in Europe needs to wake up to the reality that they are not doing this to assist the peace process. The political element of the peace process has had a bomb put in it, and it hasn’t been by terrorists, it has been by the European Union.’
A bill preventing the collapse of the government was hurriedly passed this week, but the situation remains ‘deeply depressing’ according to ex-Northern Ireland secretary, Julian Smith.
UK-EU negotiations regarding the protocol are still ongoing and continue to act as a source of volatility for the Pound.
Australian Dollar (AUD) Wavers amid Fluctuating Risk Appetite
The Australian Dollar (AUD) is trading in a narrow range this morning. The risk-sensitive currency is wavering amidst fluctuating market sentiment.
A strengthening US Dollar (USD) soured risk appetite overnight, dragging the ‘Aussie’ lower. The US Dollar’s gains were underpinned by expectations the Federal Reserve may deliver a 50bps rate hike in March.
But the Australian Dollar pared most of these losses at the start of the European session, with AUD exchange rates benefitting from a more bullish market mood.
There was no clear catalyst behind the recovery in risk appetite. Fading concerns over a conflict between Russia and Ukraine may have helped contribute to the uptick in sentiment however.
Moreover, elevated commodity prices may be acting as a tailwind for AUD exchange rates this morning.
GBP AUD Forecast: Will a Negative Consumer Confidence Index dent the ‘Aussie’?
Looking ahead, the Pound Australian Dollar exchange rate could trend higher later tonight as Australia publishes its latest consumer confidence index.
Household sentiment is forecast to drop this month. Concerns over rapidly rising inflation look to offset optimism over the reopening of Australia’s borders. Expect the ‘Aussie’ to weaken in response.
The Pound, meanwhile, could face headwinds due to ongoing UK political jitters. Conservative criticism of Boris Johnson continues to grow and the PM remains under threat of a no-confidence vote.
Fresh doubts over Johnson’s premiership may also infuse volatility into the GBP AUD exchange rate.