Pound Australian Dollar Exchange Rate News: GBP/AUD Rallied as Post-Brexit Deal Nears Completion

February 27, 2023 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Rallied as Post-Brexit Deal Nears Completion

Pound (GBP) Bolstered by Post-Brexit Deal Optimism

The Pound (GBP) saw impressive gains on Monday morning as reports circulated that Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen are expected to unveil the Northern Ireland protocol deal late Monday afternoon.

Meeting in Windsor in the early afternoon, von der Leyen and Sunak look set to sign off on the highly contentious deal that has weighed on the Pound for several months. With fears growing of a potential trade war between the EU and UK, GBP investors have been cautious over the ramifications. A statement from Number 10 said:

‘The prime minister wants to ensure any deal fixes the practical problems on the ground, ensures trade flows freely within the whole of the UK, safeguards Northern Ireland’s place in our Union and returns sovereignty to the people of Northern Ireland.’

But despite optimism over finally getting the deal over the line, the bigger challenge will be to win over the Conservative party. Sunak will have to address parliament and sell the deal to hardline Tory Brexiters who are sceptical of a deal that didn’t involve a vote. Mark Francois, Conservative backbencher and staunch Brexiter, warned of the fallout if Sunak did continue without a vote:

‘Just putting in a couple of intermediate phases, with a situation where you still end up with the European court of justice, is effectively sophistry.

‘We’re not stupid. What we want is a situation where EU law is expunged from Northern Ireland so it is treated on the same basis as England, Scotland and Wales.’

Australian Dollar (AUD) Undermined by a Cautious Market Mood

Meanwhile, the Australian Dollar (AUD) struggled to find much strength in the early European session on Monday as risk sentiment weighed heavily. Mounting concerns of central banks continuing their aggressive rate hiking policies impacted the riskier currencies.

Ongoing concerns of an escalating conflict in Ukraine further weighed on global market sentiment. After the first anniversary of the invasion, Putin delivered a speech amid fears of a fresh large-scale Russian offensive. China have since unveiled a 12-point peace plan, and that Russia is paying a ‘great deal of attention’ to it. Kremlin spokesperson Dmitry Peskov commented on the plan:

‘We are paying a great deal of attention to the plan of our Chinese friends. Of course, the details need to be painstakingly analysed taking into account the interests of all the different sides. This is a very long and intense process.’

GBP/AUD Exchange Rate Forecast: Australian Retail Sales to Boost the Aussie?

Looking ahead, the Pound Australian Dollar exchange rate could see further movement with the outcome of the post-Brexit deal and the subsequent reaction from Parliament.

Elsewhere, the ‘Aussie’ could see a rebound if retail sales print to forecast. An expected recovery from last month’s disappointing 3.9% decline, sales are expected to have picked up and improved 1.5%. December’s sales were the first decline in 2022, highlighting the cost-of-living pressures gripping the Australian economy.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Australian Dollar Forecasts