Home AUD GBP/AUD: Aussie Rises As Consumer Morale Jumps, Brexit Slams Sterling

GBP/AUD: Aussie Rises As Consumer Morale Jumps, Brexit Slams Sterling

9th September 2020

Pound (GBP) trades firmly lower as fears grow that Brexit talks could collapse
UK internal markets bill could undermine the Brexit divorce agreement
Australian consumer confidence soars 18%

The Pound Australian Dollar (GBP/AUD) exchange rate is extending losses for a 4^th straight session on Wednesday. The pair settled -0.5% lower on Tuesday at 1.7990 after falling through the key 1.80 support. At 09:00 UTC, GBP/AUD trades -0.5% at 1.7900. The pair has tumbled over 1.8% so far this week.

Check real time GBP to AUD exchange rate

Today the British government will release its internal markets bill. This bill has caused some controversy. Whilst the British government is saying that this bill is just a slight tweaking of the Brexit withdrawal agreement, clarifying trade between the UK and Ireland, the EU is seeing this viewing the bill in a very different manner. The EU considers the internal markets bill to be the overriding of an international treaty, which breaks international law. This makes the UK government look very untrustworthy to foreign investors.

This latest twist in the Brexit story is having a big impact on the Pound, which has dived lower across the board, unwinding recent gains.

The Pound could extend losses heading towards the October 15^th Brexit trade deal deadline as the reality of a no trade deal Brexit starts to hit home. Up until just a few days ago there had been an assumption that the EU and the UK would agree a deal at the last minute. However, the EU warned that any tampering with the Brexit divorce bill could mean that trade talks will collapse.

The Australian Dollar is pushing higher, supported by a surge in consumer sentiment. The Australian Westpac Consumer Sentiment index jumped 18% to 94.8 in September. This was up from 79.5 in August. The data shows that consumer confidence is returning to more normal levels, just -1.6% below the average over the 6 months prior to the covid outbreak.

This is good news for the economy as consumers often spend more when they feel confident about their financial position and job security.