Pound Australian Dollar Exchange Rate News: GBP/AUD Propped up British-Irish Summit Meeting

November 10, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Propped up British-Irish Summit Meeting

GBP/AUD Exchange Rate Strengthens amid Brexit Hops

The Pound to Australian Dollar (GBP/AUD) exchange rate firmed on Thursday amid hopes UK Prime Minister Rishi Sunak attendance of the British-Irish summit could help to ease Brexit tensions.

At time of writing the GBP/AUD exchange rate traded at around AU$1.7799, which was up roughly 0.7% from Thursday’s opening levels.

Pound (GBP) Firms as Sunak to attend British-Irish Summit

The Pound (GBP) strengthened on Thursday amid some optimism ahead of Rishi Sunak appearance at the British-Irish Council Summit.

The Summit hasn’t been attended by a UK PM since 2007 and investors are hoping talks between Sunak and the Irish Taoiseach Micheál Martin, could include how to solve the issue of the Northern Ireland Protocol.

While GBP investors aren’t expecting a breakthrough today, it hoped that any signs of progress If he is could help ease tensions between the UK and EU.

Elsewhere, the Pound’s gains were being capped by growing recession issues. The jobs market is the latest to feel the pinch. Permanent placements dropped in October for the first time since February 2021.

According to Neil Carberry, Chief Executive of the REC, the turmoil caused by the mini budget has begun to weigh on employers:

‘The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year.’

Australian Dollar (AUD) Dented by Risk Aversion

The Australian Dollar (AUD) was struggling against the majority of its peers on Thursday as market sentiment soured.

Helping to trigger the downbeat market mood was a combination of weak Chinese inflation figures on Wednesday and a rise in the country’s Covid cases. The Australian Dollar acts as a proxy currency and so any impactful events within China can heavily influence the ‘Aussie’s movement.

Guangzhou, China’s main manufacturing hub has been placed on lockdown following a rise in Covid cases. More than 5 million residents are unable to work, putting further pressure on China’s slowing economic growth.

This concerned investors, who were worried about the impact the ailing Chinese economy might have on a global scale.

However, elsewhere, positive news from Ukraine limited AUD’s losses. Russian forces have pulled out of the city of Kherson, as supply issues hindered their progress. The retreat marked a huge seatback for the Kremlin’s invasion. Whilst this cheered investors, there was a lingering sense of caution as they waited for further developments.

GBP/AUD Exchange Rate Forecast: GDP to Shed GBP Gains?

Looking ahead the Pound Australian Dollar exchange rate could be driven by the UK’s GDP report which is due on Friday.

According to forecasts, economic growth within the UK is expected to contract by 0.5% in the third quarter. If true, this will likely stoke GBP investors’ recession concerns and see the Pound shed some of its gains. However, if the contraction is less severe, then Sterling’s losses could be tempered.

Turning to the Australian Dollar, the currency is likely to move in line with the downbeat market mood. The outcome of the US elections and US inflation data could further undermine market sentiment. Meaning the ‘Aussie’ might face further headwinds.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Australian Dollar Forecasts