The AUDGBP story was mixed today as the British pound rallied through a previous resistance level but then pulled back to show a small gain for the Aussie.
The GBPAUD interbank exchange rate traded higher through 1.9730, a level which forced a previous sell-off in early-February. The pound saw a high of 1.9756 before almost 100 pips to dip below 1.9670, for a small loss of 0.07% on the day.
With nothing on the economic calendar today, buyers are testing the appetite of sellers at higher levels as the pound enters a third week of gains. With concerns still around over the spread of the Coronavirus, traders are cautious about pushing GBP any higher versus AUD as the trade negotiations with Brussels begin in earnest.
Pound Softer as EU Trade Negotiations Begin
Another headwind for the pound in coming sessions could be the Brexit trade negotiations, which are now getting underway. Traders will be watching the headlines closely as both sides wanted to display a tough stance leading into the talks.
EU nations released a mandate on Tuesday about what a future deal should look like as their Chief Negotiator Michel Barnier gets ready to lead the European end. The initial mandate was light on any serious detail and was not initially negative for the pound but both sides have clashed recently over sectors such ass fishing, where the U.K. sought to take back some control of its waters from European fishers. Bullish statements from U.K. Prime Minister Boris Johnson are another reason to be cautious about the pound after its recent strength.
Markets Still Cautious Over Coronavirus
After Monday and Tuesday saw heavy selling in the stock markets following a further spread of the Coronavirus outside the Chinese mainland, the main indices are trying to recover today. The Australian share index was up around 0.3% but the U.K.’s FTSE and the U.S. Dow Jones have marched further with gains over 1%.
The move higher in stocks is happening despite fears that the spread may worsen. The tense situation in Northern Italy was joined by the first case in South America and a move into other European nations, with Austria, Croatia and Switzerland citing cases of the virus. This cloud will likely continue to hang over markets until the spread is under control.
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