GBP/AUD Exchange Rate Mounts Recovery Amidst Hints of Possible Brexit Compromise

GBP/AUD Exchange Rate Rebounds on Brexit Hopes 

The Pound to Australian Dollar (GBP/AUD) exchange rate is showing signs of recovery this morning, supported by hopes that a Brexit trade deal could still be found this week. 

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8001, virtually unchanged from this morning’s opening rate, but having rebounded from its initial losses. 

Pound (GBP) Rallies on Reports of Compromise 

The Pound (GBP) is back on the offensive this morning, amidst hopes that a possible compromise by the UK and EU in a couple of key areas of Brexit trade talks could pave the way for a deal being struck this week. 

This was initially driven by comments Chancellor of the Duchy of Lancaster Michael Gove, who hinted at a possible compromise over fishing rights, a key sticking point in talks. 

Gove told BBC radio: 

‘I think there can be scope for compromise but the compromise exists on the way in which European boats can continue to access UK waters. 

‘Now, I think we can be very generous with that. I think that we can reach arrangements with European countries that allow a staged process so there can be a degree of certainty, so that they can manage that.’ 

Bolstering this optimism were comments from German Chancellor Angela Merkel this morning, which were interpreted as a potential hint that the EU will be willing to compromise in regards to the level-playing field. 

This has given hope that a last-minute Brexit deal could be found later today, following a meeting between Boris Johnson and European Commission President Ursula von der Leyen. 

Australian Dollar (AUD) Underpinned by Strong Consumer Sentiment 

At the same time the Australian Dollar (AUD) remains well supported this morning, amidst a robust uptick in consumer sentiment. 

The Melbourne Institute and Westpac Bank Consumer Sentiment Index jumped 4.1% in December, rising from 107.7 to 112, its highest levels since October 2010. 

This was the fourth consecutive rise in the index, with the improvement in consumer morale being attributed to Australia’s recent success in controlling the coronavirus outbreak. 

The jump also follows the publication of Australia’s latest GDP figures, which printed above expectations in the third quarter, bolstering hopes that the country is now well on the road to recovery. 

Westpac Chief Economist Bill Evans, said:  

‘After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession.’