The Pound to Australian Dollar (GBP/AUD) exchange rate slipped this morning following on from Bank of England (BoE) Governor Andrew Bailey’s speech yesterday evening.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7857.
Pound (GBP) Stumbles as Brexit Woes Continue
The Pound ticked lower against the Australian Dollar this morning after a stark warning from BoE Governor Andrew Bailey.
The UK and EU are hoping to reach an agreement on financial rules by the end of March, though Bailey hinted that the EU has been unreasonable so far in discussions.
Speaking at the Mansion House speech in the City of London, Bailey said that it would be ‘unrealistic and dangerous’ to stick with EU banking rules after Brexit.
Commenting on the EU he said:
‘I’m afraid a world in which the EU dictates and determines which rules and standards we have in the UK isn’t going to work. Is the EU going to cut the UK off from itself? There are signs of an intention to do so at the moment but I think that would be a mistake.’
‘Let me be clear, none of this means that the UK should or will create a low-regulation, high-risk, anything goes financial centre and system. We have an overwhelming body of evidence that such an approach is not in our own interests, let alone anyone else’s.’
Australian Dollar (AUD) Supported by Biden Phone Call
The Australian Dollar found support from relations between the US and China this morning.
US President Joe Biden had a phone call with Chinese President Xi Jinping as a goodwill gesture before the Lunar New Year. The call has helped to boost global market sentiment, this in turn supported the risk-sensitive Aussie.
The two were said to discuss combating the coronavirus pandemic, climate change and human rights issues.
A statement released by the White House said that Mr Biden had:
‘Underscored his fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.’
The continued weakness of the US Dollar (USD) has also helped to boost the ‘Aussie’ higher.
Pound to Australian Dollar Exchange Rate Forecast: UK GDP Figures in Focus
Pound investors will focus on tomorrow’s release of GDP figures from Q4. Forecasts predict that the UK economy will have expanded by 0.5% in the last quarter of 2020 despite tougher coronavirus restrictions in November and December.
In lieu of any notable data, the Australian Dollar will continue to be driven by market sentiment, with the ‘Aussie’ likely to continue gaining as long as the global market mood remains upbeat.
The Pound to Australian Dollar exchange rate will also be dictated by any further coronavirus developments.