Pound to Australian Dollar Exchange Rate Steadies Following Rebound Attempt
Yesterday saw the Pound (GBP) attempting to continue a rebound, but the British Pound to Australian Dollar (GBP/AUD) exchange rate steadied lower again today. Investors are hesitant to make big moves on either currency ahead of potentially big news for the forex outlook.
Sterling’s rebound and broad Australian Dollar (AUD) weakness helped GBP/AUD to surge last week. GBP/AUD jumped from 1.7717 to 1.8125 throughout the week.
However, despite hitting its best level since the beginning of the month yesterday, GBP/AUD quickly slipped back again today. GBP/AUD is struggling to keep advancing and currently trends near the week’s opening levels.
The Pound outlook could be hugely impacted by Brexit developments this week. Meanwhile, global risk-sentiment and the Australian Dollar outlook will be closely watching the upcoming US Presidential Debate.
Pound (GBP) Exchange Rates Jittery on High Street Covid19 Concerns Ahead of Brexit News
The Pound experienced a jump in demand yesterday. Investors bought the British currency amid speculation that there could finally be a breakthrough in Brexit talks this week.
However, this speculation was not enough to keep the Pound higher. Investors are anxiously awaiting Brexit developments, while coronavirus concerns continue to intensify in Britain.
Today, UK high street retailers are expressing concern about how the pandemic is affecting their businesses. Baker chain Greggs has said it will cut employee hours and potentially jobs in attempt to limit employment costs.
Australian Dollar (AUD) Exchange Rates Rebound on Reserve Bank of Australia (RBA) Speculation
Concerns that the Reserve Bank of Australia (RBA) could cut Australian interest rates as soon as next month had been hurting the Australian Dollar last week.
This only led to extended AUD losses. The currency was already falling due to market aversion to risk-correlated currencies, as the coronavirus pandemic sees a second wave in Europe.
This week has seen Australian Dollar sentiment calm slightly though. Yesterday, economists at Westpac shifted RBA interest rate cut expectations from October to November.
The delay in rate cut expectations meant that the urgency to cut was less dire than expected. It led other analysts to also shift expectations, according to Prashant Newnaha, Rates Strategist at TD Securities:
‘Media reports downplaying an October RBA move are just too hard to ignore,
In our view the main benefit the RBA would obtain from waiting till (November) would be clarity on Federal and State budgets to help it calibrate its QE program.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits US Presidential Debate
Markets have settled slightly since yesterday, after a week of selling on the worsening coronavirus pandemic.
For now, markets are hesitant to keep making big risk-related movements. This is due to anticipation for this evening’s upcoming US Presidential Debate.
The first televised debate for the 2020 Presidential Election will take place during the evening of today’s American session. It will see US President Donald Trump debate head to head with Democrat Party candidate Joe Biden.
Markets are betting that Biden has a stronger chance of taking the election. As a result, a strong performance for Trump could spook markets and lead to more risk-aversion.
This would also lead to fresh weakness in the risk and trade-correlated Australian Dollar.
The Pound, on the other hand, will continue to be driven by domestic politics. Any developments or breakthroughs in Brexit negotiations could lead to huge Pound gains, but a lack of news could see Sterling plummet on no-deal Brexit fears.
Tomorrow’s upcoming UK growth rate report could also influence the Pound to Australian Dollar (GBP/AUD) exchange rate.