January 22, 2020 - Written by John Cameron
STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as UK-EU Trade Deal Hopes Improve
GBP/AUD Exchange Rate Edges Higher as BoE Rate Cuts Odds Ease
The Pound Australian Dollar (GBP/AUD) exchange rate rose by 0.6%, with the pairing currently trading around AU$1.917 after Sajid Javid, the UK Chancellor of the Exchequer, said that a full EU trade deal would be possible by the end of 2020.
Mr Javid commented:
‘There is a strong belief on both sides that it can be done. Both sides recognise that it’s a tight timetable, a lot needs to be done.’
‘It can be done. And it can be done for both goods where we want to see zero tariffs and zero quotas, and also services.’
Today also saw the Pound benefit from December’s UK public sector net borrowing report, which came in at a less-than-expected £4,04 billion ahead of Sajid Javid’s spring budget.
The borrowing report along with promising UK-EU developments have benefited the GBP/AUD exchange rate today, with the Bank of England’s (BoE) rate cut odds being lowered as the UK economic outlook improves.
AUD/GBP Exchange Rate Sinks as Australian Consumer Confidence Sinks in January
The Australian Dollar (AUD) failed to gain today following last night’s release of January’s Westpac consumer confidence report, which fell by -1.8%, dampening market appetite for the ‘Aussie’.
Wespac’s Chief Economist Bill Evans commented:
‘In short, confidence has been further eroded by the bushfires but, because the index was starting from such a modest level, it was likely that the fall in confidence would be less than some may have expected.’
Meanwhile, the risk-sensitive ‘Aussie’ continues to suffer from rising fears over a decoupling between the US and China just a week after the official signing of the ‘phase one’ trade deal.
Chad Bown, a Senior Fellow at the Peterson Institute for International Economics, commented:
‘While this deal is great in the sense that it has calmed things, additional tariffs aren’t going on, aside from that the deal is essentially a disaster. It doesn’t address any of the systemic issues’.
GBP/AUD Outlook: Could the ‘Aussie’ Rise on Positive Employment Data?
Australian Dollar (AUD) traders will be looking ahead to tomorrow’s release of Australia’s employment data for December. Any signs that unemployment is dropping, or that there’s an increase in employment, would prove AUD-positive.
Tomorrow will also see the release of January’s Australian consumer inflation expectations report, which is expected to rise by 3.8%.
The GBP/AUD exchange rate will continue to be driven by economic developments this week, with any further signs that could put pressure on the Bank of England to slash its interest rates on the 30th January being Pound-negative.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts