GBP/AUD Climbs Higher on Successful EU Negotiations
(UPDATED 14:30, 28/2/23)
The Pound Australian Dollar (GBP/AUD) exchange rate remains buoyant despite Prime Minister Rishi Sunak hinting that the agreement will be pushed through even if the Democratic Unionist Party (DUP) rejects it. Sterling continues to soar as Sunak is hopeful both vocal critics from his own Tory party, and the DUP, will accept the new deal. Sunak also outlined the benefits that Northern Ireland now finds itself enjoying:
‘Remember, Northern Ireland has this very special position where it has access to the UK market, it has access to the EU market which makes it an incredibly attractive place to invest.’
At time of writing the GBP/AUD exchange rate is at around $1.8000, a 0.60% climb from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Surges amid Resolved Northern Ireland Protocol Issues
The Pound Australian Dollar (GBP/AUD) exchange rate is strengthening considerably this morning in the wake of the post-Brexit trade agreement between the UK and EU. However. better-than-expected Australian retail sales capped any significant gains.
At time of writing, the GBP/AUD exchange rate is around $1.7962, a 0.38% jump from this morning’s opening levels.
Pound (GBP) Climbs on Post-Brexit Optimism
The Pound (GBP) is enjoying strong gains this morning as Prime Minister Rishi Sunak unveiled the agreement with the EU that hopes to resolve trade issues with Northern Ireland. The ‘Windsor Framework’ was unveiled by Sunak after final talks with European Commission President Ursula von der Leyen yesterday.
Coming after months of turbulent negotiations and setbacks with the EU, fears of a trade war weighed heavily on investors’ minds. With a resolution finally agreed upon, the Pound could maintain strength. However, GBP investors are now eagerly waiting the reaction from both the Conservative and Democratic Unionist Party (DUP). When asked if the agreement would be put into place regardless of opposition, Sunak replied:
‘It’s an incredibly positive and comprehensive agreement, ensures that we have smooth flowing trade within the UK internal market.
‘This is not necessarily about me or any one political party. This is about what’s best for the people in communities and businesses in Northern Ireland.’
A potential rebellion within Sunak’s own Tory party could cause further divisions, and a return to political volatility could drag Sterling lower again.
Australian Dollar (AUD) Supported by Strong Retail Sales
Meanwhile, the Australian Dollar (AUD) is capping any significant gains for the Pound in the wake of stronger-than-expected retail sales. Bouncing back from a woeful 4% slump in the previous month, sales rebounded above market forecasts. Against an expected 1.5% increase, sales jumped to 1.9% MoM in January.
Further positive news was that restaurants, cafes, and takeaway food increased by 1.2% to a new record high after months of slowing growth. Turnover in retail increased rose across all Australian states and territories, emphasising the rebounding industry. Ben Dorber, ABS Head of Retail Statistics, commented:
‘The continued return of large-scale sporting and cultural events in January, combined with high costs reflected in prices, has boosted sales in catering services which are part of the cafes, restaurants and takeaway food industry.’
Pound Australian Dollar Exchange Rate Forecast: NI Protocol Deal Reaction to Sour Sterling?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement when both the Conservative and Democratic Unionist Party (DUP) respond to the Northern Ireland protocol deal. A vote in parliament on some elements of the deal will take place later today. A return to political volatility in the Tory party could weigh on the Pound once more.
Meanwhile, a speech from Reserve Bank of Australia (RBA) Assistant Governor Brad Jones could influence the ‘Aussie’. In light of strong retail sales and positive economic news as of late, a hawkish tone could inspire the Australian Dollar.