The Pound has recently risen by 0.5% against the Australian Dollar, following the official start of Brexit talks. Almost a year after the UK voted to leave the EU, the fact that talks have begun has raised trader optimism about the Brexit process.
Will Current Brexit Camaraderie Persist and Cause Further GBP AUD Gains?
The latest Pound appreciation has largely been caused by trader optimism that Brexit will go as smoothly as promised.
To this effect, the first proper meeting between UK and European negotiators David Davis and Michel Barnier has gotten off on a solid footing.
On the UK side, Davis has declared that;
‘There is more that unites us than divides us. So while there will undoubtedly be challenging times ahead of us in the negotiations, we will do all that we can to ensure that we deliver a deal that works in the best interest of all citizens.
To that end, we start this negotiation in a positive and constructive tone, determined to build a strong and special partnership between ourselves and our European allies and friends’.
Meanwhile, Barnier has stated;
‘Today we are launching the negotiations on orderly withdrawal of the UK from the EU. Our objective is clear, we must first tackle uncertainties caused by Brexit. First for citizens, also for beneficiaries of EU policies and the impact on borders; in particular, Ireland.
I hope that today we can identify priorities and the timetable that will allow me to report to the European Council later this week that we have a constructive start to negotiations’.
If the currently amenable tone of Brexit talks continues then the GBP AUD exchange rate may rise further. This is because a continuing tone of cooperation would lower the chances of an economically turbulent ‘Hard Brexit’ taking place.
Australian Dollar Losses Possible if Key Reforms are Blocked
The Australian Dollar’s recent losses against the Pound have come after a statement from Reserve Bank of Australia (RBA) Governor Philip Lowe.
Commenting on the future AU economy, Lowe warned that;
‘The political process needs to find ways of delivering a path for reforms that we need. There is no shortage of good ideas, but there’s too many areas in which good ideas are not being implemented. If we can’t change that then we will condemn ourselves to slower growth’.
Lowe’s implication is that political opposition could hold the Australian economy back, a development that could trigger consistent Australian Dollar declines.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trading at 1.6831 and the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.5940.
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