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GBP/AUD: Pound Rises Despite Persistent Brexit Risks

14th September 2020

Pound (GBP) pushes northwards even as MP’s prepare to vote on the controversial internal markets bill
Vote could go either way, as bill could break international law
Australian Dollar (AUD) holding steady ahead of RBA minutes on Tuesday
Vaccine optimism not boosting risk sensitive Aussie Dollar

The Pound Australian Dollar (GBP/AUD) exchange rate is advancing at the start of the week. After diving 3.7% across the previous week the pair is rebounding from an 18-month low of 1.7495. At 08:30 UTC, GBP/AUD trades +0.5% at 1.7670 at the top of the daily traded range.

Brexit remains front and central for Pound investors as MP’s are set to vote on the controversial Internal Markets Bill. The House of Commons will debate the bill which violates the Brexit divorce treaty with the EU and breaks international law.

The bill reflects the Prime Ministers change of mind over the customs border in the Irish sea, a concession that was key for agreeing the deal with the EU last year.

Several MP’s of the Conservative party have said that they will vote against the bill or at least abstain. If it does go through the Justice Secretary Robert Buckland has already said he will resign.

The 8^th round of Brexit talks concluded last week with little in the way of progress. Informal Brexit talks are set to continue across the week with the 9^th round of formal talks taking place next week.

There is no high impacting UK data due today. Investors will look ahead to the release of employment data today and the Bank of England rate decision on Thursday.

The Australian Dollar would normally be expected to move higher in risk on trading. However, news that the AstraZenca covid vaccine trials have restarted have failed to spark a rally in the risk sensitive Aussie Dollar even though riskier assets across the financial markets are broadly advancing.

Investors appear reluctant to place aggressive bets ahead of the release of Reserve Bank of Australia minutes on Tuesday. Chinese retail sales data will also be in focus, as investors look for signs that the consumer recovery in the world’s second largest economy is gaining momentum.