- Lack of progress in latest Brexit talks weighs on Pound
- BoE Chief Economist fans speculation of negative interest rates
- Aussie Dollar rallies amid growing optimism of economies recovering from covid-19
- At 09:30 UTC, GBP/AUD -0.2% at 1.8783 >> Real time exchange rates
The Pound continues to nosedive against the Australian Dollar for a sixth straight session as the new trading week begins. The Pound Australian Dollar exchange rate fell 0.7% across the previous week, settling at 1.8871
At 09:30 GBP/AUD is trading -0.2% at 1.8783, a fourth month low as an improved market mood boosts the Australian Dollar, whilst Brexit fears return to haunt pound investors coupled with fears of negative interest rates.
Both the EU Brexit negotiator Michel Barnier and his UK equivalent David Frost acknowledged difficulties in the latest round of Brexit talks. The penultimate round of negotiations before a key deadline in June.
Brussels wants the UK to agree to EU rules in order to have access to the single market. Boris Johnson’s team is rejecting the idea. The clock is ticking to the June 2nd deadline, after which neither side can ask for a transition period extention.
Adding pressure to the pound, Chief Economist at the Bank of England, Andy Haldane, fuelled speculation of negative interest rates in an interview over the weekend. He confirmed that they are a tool that policy makers at the central bank would consider. His comments come after data showed that the UK GDP contracted -5.8% month on month in March.
The Australian Dollar is trending higher amid a broad risk on sentiment in the financial markets. Stocks in Asia and Europe are pushing higher amid growing confidence that the worst of the coronavirus pandemic has now passed.
Investors are shrugging off elevating US – Sino trade tensions and are focusing on the reopening of economies across the globe. China, Australia’s largest trading partner is expected to increase demand for Australian exports, particularly metals as its economy starts to fire up again after the coronavirus pandemic.
Tensions between US and Australia could limit gains in the Australian Dollar going forwards after President Trump ramps up pressure on China by banning mobile giant Huawei from access to American technology.