Pound (GBP) Rises on Hopes of Covid-19 Vaccine
The Pound (GBP) rose today following news that the UK could receive a projected 10 million doses of the Pfizer Covid-19 vaccine by the end of the year.
Consequently, the GBP/AUD exchange rate is currently fluctuating around AU$1.821, up 0.7% against today’s opening rate.
Brexit developments remain in focus, however, after Prime Minister Boris Johnson’s controversial internal market bill was significantly voted down in the House of Lords.
Nonetheless, Mr Johnson appears resilient, and intends to push forward with the bill despite the Lord’s ruling.
Simon Coveney, Ireland’s Foreign Minister for Defence, raised the alarm over a possible no-deal, saying:
‘[I]f UK passes law designed to break International Law, WI & Protocol, then there will be no trade deal. EU cannot ratify a new deal while U.K. is legislating to break a previous agreement.’
In UK economic data, today saw the UK Unemployment Rate rise to a four-year high, with the data showing a 4.8% increase the three months to September.
As a result, GBP investors are concerned about the effects of the current nationwide lockdown, which could severely impede Britain’s economic recovery before Christmas.
Australian Dollar (AUD) Falls as Chinese Inflation Disappoints
The Australian Dollar (AUD) has benefited from positive Covid-19 vaccine news but has been weighed down by lacklustre Chinese inflation data, which slipped into a state of deflation in October.
Consequently, demand for the risk-averse ‘Aussie’ has suffered now that China – the world’s second largest economy – has suffered a setback owing to the coronavirus pandemic.
Analysts at Reuters said:
‘China’s factory-gate prices fell at a sharper-than-expected pace in October, weighed by soft demand for fuel even as the trade and manufacturing sectors staged impressive recoveries from their COVID-19 slump.’
With China being Australia’s largest trading partner, this has sparked fears that Australia, too, could suffer a setback in the near term.
In Australian economic news, today saw the release of the National Australia Bank’s (NAB) Business Confidence report, which rose to its highest level since 2019.
NAB said in its statement:
‘The survey continues to show that the economy has rebounded from the sharp fall in activity in H1 2020 and will likely continue to recover as the economy reopens.’
‘The improvement in confidence is encouraging but remains fragile, and it will likely remain that way until a (COVID-19) vaccine is available.’
GBP/AUD Forecast: Brexit and Covid-19 Vaccine News in Focus
Australian Dollar (AUD) investors will be eyeing Covid-19 vaccine developments this week.
If a vaccine appears more immense following Pfizer’s announcement of a 90% effective treatment the virus, then the risk-averse ‘Aussie’ would head higher.
The aftermath of the US elections will also remain in focus.
Any signs that President Donald Trump could contest the results would dampen risk sentiment and drag down the AUD/GBP exchange rate.
Brexit developments will drive the Pound (GBP) for the rest of this week.
The GBP/AUD exchange rate could head higher if it looks increasingly likely that Downing Street could pursue a post-Brexit trade agreement with the European Union.