The GBP to AUD interbank exchange rate stands at 1.9141 today. This is -1.9%, or over -3.5 cents, below sterling’s 41-month high against the so-called Aussie, its strongest since June 24th 2016, reached this Monday 16th December, at 1.9513.
The sterling vs Australian dollar interbank rate stands further below its 41-month high today, because UK Prime Minister (PM) Boris Johnson has unexpectedly tightened the UK’s future EU trade deal negotiations schedule.
Speaking yesterday, PM Johnson said that he’ll amend the Brexit deal, called the Withdrawal Agreement Bill (WAB), to make it illegal for the government to extend the talks beyond the end of next year. Following the UK’s election last week, the PM enjoys an 80-strong majority in Parliament, so it’s thought the amendment will pass.
PM Johnson may intend to fulfil his pledge to “get Brexit done”, included in the Conservative Party’s manifesto. Yet he risks creating a “cliff edge”, in which the UK either agrees a trade deal in the next 12 months, or risks facing higher tariffs and bureaucracy to trade with Europe in 2021. So this has weighed down the pound.
Australian Dollar Strengthens Versus Pound Even Though RBA Minutes Downbeat
Turning Down Under, sterling has weakened versus the Australian dollar, even though the minutes of the Reserve Bank of Australia’s (RBA) meeting this week were unexpectedly downbeat.
In particular, even though the RBA’s board stated that they think the economy has reached “a gentle turning point”, the outlook for inflation and wage growth remains below target.
This could slow Australia’s economy next year, and so raises the possibility that the Reserve Bank could again cut interest rates, close to the effective lower bound of 0.25%, or initiate its own form of Quantitative Easing, an extraordinary stimulus. Traditionally, both these measures tend to weigh down the currency concerned.
Australia’s Job Market Statistics, BoE Decision, Could Influence GBP to EUR Tomorrow
Looking to tomorrow, Australia’s job market statistics for November are released at 00.30 GMT. These are forecast to show that unemployment held steady last month, at 5.3%.
Meanwhile, in the UK, we’ll see if the PM further explains his trade talks strategy, while the Bank of England announces its latest interest rate decision, at 12.00 GMT. These events may affect the exchange rate, so could be worth watching for.
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