GBP/AUD Exchange Rate Sinks as Australia’s Economy Emerges from Recession
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.4% today, with the pairing currently trading around AU$1.811.
The Australian Dollar (AUD) rallied today following the release of the Australian GDP data for the third quarter, which beat forecasts and rose by 3.3% quarter-on-quarter.
The growth data showed that the Australian economy had grown for the first time this year.
As a result, ‘Aussie’ investors heaved a sigh of relief on the fact that the Australian economy had emerged from recession.
Federal Treasurer Josh Frydenberg, however, warned:
‘Technically the recession is over, but the recovery is not. The economic indicators are positive. That being said, this is a very challenging time and there’s a lot of ground to make up.’
While today’s positive Australian economic data has boosted the AUD/GBP exchange rate, tensions between China – the world’s second largest economy – and Australia continue to haunt Australian markets.
This follows news that Beijing has refused to apologise for a ‘fake’ image which accused Australia of war crimes in Afghanistan.
With China being Australia’s largest trading partner, this has sparked concerns for Australia’s economy going forward.
Pound (GBP) Falls as Brexit Talks Show No Signs of Progress in Crucial Week
The Pound (GBP) has continued to struggle from growing concern over UK-EU Brexit talks, which still show no signs of progress towards a post-Brexit trade agreement.
Ursula von der Leyen, the President of the European Commission, commented
‘We want an agreement, but not at any price. We are well prepared for both scenarios so we will see in the next days how things turn out.’
As a result, GBP investors are remaining cautious as there have been no clear signs of a consensus between Downing Street and the EU over the past crucial months.
Nonetheless, Foreign Secretary Dominic Raab offered a glimmer of hopes at the beginning of this week, saying that there was a Brexit deal to be done.
However, he also warned that the EU needed to be more ‘pragmatic’ in trade talks.
Meanwhile we could see Sterling pick up over the next few days after it was revealed that pharmaceutical giants Pfizer and BioNTech had been approved to rollout the Covid-19 vaccine in the UK next week.
A Covid-19 vaccine rollout would improve the outlook for Britain’s economic recovery and likely boost the GBP/AUD exchange rate.
GBP/AUD Outlook: Australian Trade Data in Focus
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of October’s Australian Trade Balance report.
Any signs that Australia’s economy is on the road to recovery, with a surge in exports, would prove AUD-positive.
Tomorrow will also see the release of Australia’s Home Loans data for October.
If this figure rises, then the AUD/GBP exchange rate could edge higher.
The GBP/AUD exchange rate will continue to be driven by Brexit developments throughout the course of this week.
We could see Sterling plummet if there are further Brexit tensions which could jeopardise a year-end trade agreement.
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