December 17, 2020 - Written by John Cameron
STORY LINK GBP/AUD Exchange Rate Steady as Bank of England Holds Interest Rates
GBP/AUD Exchange Rate Rangebound as Brexit Talks Make ‘Good Progress’, according to EU
The Pound to Australian Dollar (GBP/AUD) exchange rate continues to trend higher today after the Bank of England (BoE) held interest rates at 0.1% despite an uncertain economic outlook.
At the time of writing the GBP/AUD exchange rate is currently fluctuating around AU$1.784.
The BoE’s Monetary Policy Committee (MPC) said in the report:
‘The outlook for the economy remains unusually uncertain. It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom.’
Nonetheless, the GBP/AUD exchange rate has been supported by positive Brexit news, with signs that UK-EU talks could be progressing.
Michel Barnier, the EU’s Chief Negotiator, said that there had been ‘good progress’ in talks between the two sides, despite remaining obstacles.
As a result, GBP investors are now more hopeful that Downing Street and Brussels could find a consensus and trade and secure a deal ahead of January 1st.
Australian Dollar (AUD) Steady as Risk Sentiment Improves while Australian Unemployment Falls
The Australian Dollar (AUD) has benefited from growing risk sentiment today, with Europe now due to rollout a Covid-19 vaccine shortly after Christmas.
As a result, investors are seeking out riskier assets like the ‘Aussie’.
In Australian economic news, today saw the release of the latest Employment Change data for November, which beat forecasts and rose to 90 thousand.
Today also saw the release of November’s Australian Unemployment Rate, which beat forecasts and fell to 6.8%.
Robert Carnell, an analyst at ING, was optimistic about jobs going forward, saying:
‘In the coming months, we suspect many of those failing to find work this month will find their search efforts rewarded, which should bring the unemployment rate down once more. Though this hypothesis clearly rests on how many more people continue to re-enter the labour force in search of work in the months ahead, so the unemployment rate may well flip around for a few months until those trends settle down. ‘
Meanwhile, AUD traders are becoming more optimistic about the US revealing its stimulus package in the next few days.
As a result, we could likely see the AUD/GBP exchange rate head higher as appetite for the ‘Aussie’ continues to grow.
GBP/AUD Outlook: Could the ‘Aussie’ Rise as Further Covid-19 Vaccine Rollouts are Announced?
Sterling investors will be monitoring tomorrow’s release of December’s GfK Consumer Confidence report.
Any indications that the outlook for the British economy is improving would boost the Pound.
Tomorrow will also see last month’s retail sales figures. If this fall below forecasts, then we could see some of Sterling’s gains compromised.
Brexit will continue to dictate the direction of the GBP/AUD exchange rate, however, with any indications of progress towards a post-Brexit trade deal being GBP-positive.
Meanwhile, the Australian Dollar could head higher this week if the outlook for the global economy continues to improve as Covid-19 vaccines are expected to rollout across Europe after Christmas.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts