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Pound to Australian Dollar Exchange Rate Advances Slow as UK Outlook Remains Uncertain

Pound to Australian Dollar Exchange Rate Trending Higher but Gains Limited 

The Australian Dollar’s (AUD) weakness has made it easier for the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to advance this week. However, as uncertainty over Britain’s Brexit and coronavirus situations continue to weigh heavily, the pair’s outlook is limited. 

GBP/AUD continues to trend with a bullish bias overall though. Last week saw impressive gains for the pair as it jumped from the level of 1.8063 to 1.8243 – almost two cents. 

This week has only seen GBP/AUD climb even higher. Yesterday, GBP/AUD touched on a high of 1.8436. This was the best level for GBP/AUD in four months, as the pair capitalised on ‘Aussie’ losses. 

At the time of writing, GBP/AUD is trending near the level of 1.8392. Still high, but unless there is more optimistic UK news, the Pound’s outlook is likely to see continued pressure. 

Pound (GBP) Exchange Rates Under Pressure as UK Data Fails to Impress 

Over the past week, the Pound has been benefitting from hopes that a UK-EU Brexit deal can still be reached, as well as weakness in rivals. GBP/AUD has been gaining largely as the Australian Dollar tumbles. 

However, broad uncertainty still persists. Concerns that UK-EU negotiations could fall apart are keeping the Pound (GBP) from advancing. 

Today’s UK data did little to support the Pound outlook either. UK inflation fell within expectations, while public borrowing figures worsened. 

Instead, the data highlighted the struggle with the coronavirus pandemic that Britain still faces. 

Australian Dollar (AUD) Exchange Rates Bolstered by Market Risk-Sentiment 

The Australian Dollar (AUD) is a currency often correlated with risk and trade sentiment. As a result, it is a little stronger today. 

Investors are more willing to take risks again amid speculation that US Congress could still agree to US fiscal stimulus before next week’s US Presidential Election. This is helping keep GBP/AUD away from its best levels. 

However, the Australian Dollar remains low overall. The ‘Aussie’ has seen bearish performance for much of the past week due to Reserve Bank of Australia (RBA) easing bets

Comments from RBA officials have caused bets of interest rate cuts and quantitative easing (QE) to surge. This has been the primary cause of Australian Dollar losses and GBP/AUD gains, and these concerns continue to weigh on the ‘Aussie’ outlook. 

Pound to Australian Dollar (GBP/AUD) Exchange Rate Outlook to be Driven by UK News 

The Australian Dollar is likely to keep being driven by shifts in risk-sentiment, while Reserve Bank of Australia (RBA) speculation weighs on the currency’s outlook. 

As a result, the biggest potential to influence the GBP/AUD outlook in the coming sessions will come from UK news. 

Brexit uncertainties remain the biggest focus for Sterling. If UK-EU negotiators get closer to reaching a deal then the Pound outlook will rise, but if talks collapse the Pound would plummet. 

UK coronavirus developments will remain a focus as well. The UK government is under rising pressure to implement a ‘circuit breaker’ lockdown that critics say will be better in the long-term for managing Britain’s pandemic crisis. 

Bank of England (BoE) speculation may also influence the Pound again in the coming sessions. Many BoE officials, including Governor Andrew Bailey, will hold speeches tomorrow.  

Rising bets of negative interest rates, for example, would put further pressure on the Pound to Australian Dollar (GBP/AUD) exchange rate.