The AUD to GBP exchange rate is trying to mount a rally after failing to close below the early-February lows yesterday. Prices closed just above the 0.5050 interbank level and this has led to a 0.75% rally, which sees the pair trading at 0.5100.
We noted in recent articles that despite stronger economic data from the U.K., the Australian dollar forecast seemed to be discounting the spread of the Coronavirus across Europe. Yesterday also brought the start of the real Brexit trade talks, with both sides looking to give little away. The Aussie will look to build on these events and try to push higher into the weekend.
U.K. Threatens to Walk Away Without a Trade Deal
Britain and Europe have now laid out their opening demands for the upcoming trade talks over the U.K.’s decision to leave the European Union. Both countries have clashed in the past over the type of deal that the U.K. will be granted, whilst Boris Johnson has been clear that he will walk away from talks if the terms do not meet true independence. Michael Gove, who is the minister in charge of Brexit proceedings, reiterated those comments saying, “In pursuit of a deal we will not trade away our sovereignty”.
This week has been quiet for economic data releases and markets will keep their eye on global headlines to drive the AUD v GBP into the weekend. Monday sees Chinese Manufacturing data for February released and this could drive the Aussie forecast if the situation is worse than feared after the Lunar New Year lockdown in the country.
Coronavirus Fears Still Dominate the Headlines
Fears over the Coronavirus spread are still dominating the headlines and the U.K. has seen another two cases, bringing the total in the country to 15. These cases were linked to the previous outbreaks in Italy and Tenerife.
The figures in Italy and Spain have not moved dramatically since yesterday but stock markets are still having a bad week with the Australian Share Index down 7% for the week, whilst the U.K.’s FTSE is down around 8%.
The markets will likely remain cautious into the weekend as traders monitor global news headlines for the virus and the Aussie dollar may see further gains into Friday before the Chinese PMI data on the Monday.
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