Pound Rises as Covid-19 Vaccine Boosts Confidence in British Economy
The GBP/AUD exchange rate held steady today following the news from the pharmaceutical giant, Pfizer, who claim to have a vaccine that has proven 90% effective in clinical trials. The pairing is currently fluctuating around AU$1.821.
Consequently, Sterling has benefited from renewed hopes in the British economy, which could substantially benefit from a rollout of the vaccine in the near future.
British Health Secretary Matt Hancock commented:
‘If this or any other vaccine is approved, we will be ready to begin a large-scale vaccination programme.
‘We do not yet know whether or when a vaccine is approved, but I have tasked the NHS with being ready from any date from 1 December.’
Brexit has also dominated UK news today, with a summit of EU leaders now expected to see November 19th as a deadline for a draft Brexit deal.
As a result of this increased pressure to secure a trade agreement, GBP investors are now more hopeful that Downing Street could form a trade agreement in the weeks days ahead.
One EU diplomat said:
‘If there isn’t good news by then, then you really have to say that time is up – it just isn’t possible. The leaders will need to see that it is there.’
Australian Dollar (AUD) Steady as Covid-19 Vaccine News Boost Risk Sentiment
The Australian Dollar failed to edge higher against the Pound today despite stronger-than-expected Australian trade data.
Furthermore, news of a possible Covid-19 vaccine has proved beneficial for the risk-averse ‘Aussie’.
Nevertheless, Sterling seems to have received a substantial boost from the Covid-19 vaccine news, leaving the AUD/GBP exchange rate relatively subdued.
Instead, AUD traders are focusing on the US 2020 election, which sees Democrat Joe Biden presently slated as the President-elect, despite protestations from President Donald Trump.
Australia’s economy looks set to struggle, however, with analysts warning that the economy could falter without a strong fiscal boost from the Reserve Bank of Australia (RBA).
Steven Kennedy, the Australian secretary of the Department of the Treasury, commented:
‘[G]iven the lack of conventional monetary support available, the recovery could falter without a strong fiscal policy response leading to years of anaemic growth.
‘More and more unemployment would become entrenched reducing the productive capacity of the economy. Lower growth also means that inflation and wages would likely remain lower for longer.’
GBP/AUD Outlook: Could Brexit Deal News Boost Sterling This Week?
Australian Dollar (AUD) investors will be awaiting tomorrow’s release of November’s Consumer Inflation Expectations.
Any improvement in Australia’s economic outlook would prove AUD-positive.
The Australian Dollar will also remain sensitive to global risk sentiment.
As a result, we could see the ‘Aussie’ head higher if the Covid-19 vaccine appears to be more likely to manifest in the months ahead.
Tomorrow will see the release of the UK’s latest GDP figure for the third quarter.
If UK economic outlook improves, then Sterling would head higher.
Brexit news will also continue to drive the GBP/AUD exchange rate this week. So, any indications of a breakthrough in trade talks in favour of a trade agreement would be GBP-positive.