GBP/AUD Exchange Rate Rises as Eurozone Economic Uncertainty Drags on ‘Aussie’
The Pound to Australian Dollar (GBP/AUD) exchange rate rose today, with the pairing currently trading around $1.809.
The Australian Dollar fell against Sterling today despite global recovery hopes offering a glimmer of hope for Australia’s struggling economy.
American-based biotechnology giant Moderna announced results of its interim Covid-19 vaccine analysis which showed a 94.5% efficacy rate.
Consequently, this has buoyed confidence in the risk-sensitive ‘Aussie’ which is particularly sensitive to global economic uncertainties.
However, growing uncertainty for Europe’s economies following a vetoing of the European Union’s seven-year Covid-19 budget by Poland and Hungary.
As a result, this has weighed on demand for the Australian Dollar as the Eurozone faces increasing uncertainty with Brexit and Europe’s Covid-19 crisis.
Pound (GBP) Edges Higher Despite Fears of Brexit Deal Delay
Sterling rose against the ‘Aussie’ today as despite Brexit concerns remerging following news that the European Union could vote on a Brexit deal as late as December 28th.
Simon Coveney, Ireland’s foreign minister, was also pessimistic about a Brexit deal breakthrough in the next few days, saying:
‘If there is not a major breakthrough over the next week to 10 days then I think we really are in trouble and the focus will shift to preparing for a no trade deal and all the disruption that that brings.’
As a result, UK markets are becoming increasingly jittery over the prospect of a possible no-deal Brexit at the end of the year.
However, hopes that December could be largely free of the strict national lockdown has boosted demand for the Pound.
This follows reports that Downing Street was reviewing England’s tier system.
Consequently, GBP investors are more confident that December could see the UK Government ease restrictions and reopen sectors of the economy.
Government Minister Robert Jenrick said:
‘[I]t is too early to say which tiers people will be able to go into. But we all want to see a significant easing of the measures in all parts of England at the beginning of next month.’
Could No-Deal Brexit Fears Drag Down the Pound This Week?
Australian Dollar (AUD) traders will be awaiting tomorrow’s release of September’s Australian HIA New Home Sales report.
Any signs of Australia’s economy improvement would boost the ‘Aussie’.
Additionally, any further indications of a successful Covid-19 vaccine would also boost risk sentiment and uplift the AUD/GBP exchange rate.
Brexit developments will continue to drive the GBP/AUD exchange rate, however, so any signs of delay or hesitation in UK-EU trade talks would prove GBP-negative.
UK inflation data will also be in focus tomorrow. Any further signs of a setback for the British economy would drag on Sterling.