GBP/AUD Exchange Rate Falls as Boris Johnson Self-Isolates
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.5% today after Prime Minister Boris Johnson undertakes self-isolation following contact with someone of Covid-19 symptoms. The pairing is currently trading around AU$1.805.
As a result, Sterling traders are more cautious today as this week could be crucial for UK-EU Brexit talks.
Britain’s Chief Negotiator Lord David Frost was also cautious, saying:
‘We’re working very hard to get a deal but there’s quite a lot to do.’
Several senior Number 10 sources have also noted that Boris Johnson remains hard-line in his stance on Brexit.
Ireland’s Foreign Minister Simon Coveney was pessimistic, saying:
‘We really are in the last week to 10 days of this, 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.’
Meanwhile, GBP investors will be awaiting today’s speech from Jonathan Haskel, a monetary policy member at the Bank of England (BoE).
Any dovishness about the state of the UK economy would prove GBP-negative.
Australian Dollar (AUD) Edges Higher on Covid-19 Vaccine Hopes
The risk-sensitive Australian Dollar (AUD) has continued to head higher on hopes of a Covid-19 vaccine today.
Pharmaceutical giant Moderna announced that its Covid-19 vaccine candidate met a Phase 3 trial, demonstrating an impressive 94.5% efficacy.
Consequently, this has buoyed appetite for the risk-correlated ‘Aussie’.
Adam Vettese, an analyst at eToro, recommended caution, however:
‘Until it is available for widespread use, then I expect markets to remain volatile and to reflect the general nervousness currently felt by investors.
‘However, once – or even if – that happens, you can expect fresh rally in share prices, particularly for stocks in sectors most affected by coronavirus, such as oil, retail and travel.’
AUD investors will be awaiting today’s speech from the Reserve Bank of Australia’s Christopher Kent.
However, any downbeat comments about Australia’s economic performance would be AUD-negative.
GBP/AUD Forecast: Covid-19 Vaccine News Could Continue to Boost ‘Aussie’
Pound (GBP) investors will be looking ahead to tomorrow’s speech from the Bank of England’s (BoE) Governor Andrew Bailey.
If the BoE appears overly negative in its forecasts for the British economy, then the GBP/AUD exchange rate would fall.
However, Brexit news will also remain the key driver behind the Pound.
As a result, we could see Sterling fall if UK-EU trade talks continue to show a lack of progress towards a trade agreement.
Meanwhile, the Australian Dollar will be driven by global risk sentiment. If Covid-19 vaccine news remains positive, then demand for the risk-sensitive ‘Aussie’ would increase.