Pound Australian Dollar (GBP/AUD) Exchange Rate Rallies as Theresa May Offers Brexit Delay Vote
UPDATE: This afternoon the Pound Australian Dollar (GBP/AUD) exchange rate rose by 1% and is currently trading at an inter-bank rate of AU$1.8480.
The pairing rallied over the course of the day as a result of Brexit optimism as investors saw a soft Brexit the most likely option.
Further causing an upswing in support for Sterling was Theresa May’s promise to MPs of a vote which would allow them to delay Brexit if they reject her deal on 12 March.
However, the Prime Minister continued to air her desire to avoid extending Article 50, saying:
‘Let me be clear, I do not want to see Article 50 extended.
‘Our absolute focus should be on working to get a deal and leaving on 29 March.
‘[…] And the House should be clear that a short extension – not beyond the end of June – would almost certainly have to be a one-off.’
Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as May says Article 50 Extension doesn’t ‘Deliver a Deal’
UPDATE: This afternoon the Pound Australian Dollar (GBP/AUD) exchange rate continued to slide by around 0.5%.
The pairing is currently trading at an inter-bank rate of AU$1.8220.
Theresa May reiterated her opposition to an Article 50 extension during a summit in Sharm El-Sheikh, stating:
‘An extension to Article 50, a delay in this process, doesn’t deliver a decision in Parliament, it doesn’t deliver a deal. All it does is precisely what the word ‘delay’ says. Any extension of Article 50 isn’t addressing the issues.’
This likely caused Sterling to slip further against the ‘Aussie’.
During the Prime Minister’s press conference at the Summit, she stated:
‘There is still more work to do, and my team will be in Brussels tomorrow working on the legally binding assurances that the UK Parliament needs in relation to the backstop.
But what I have sensed in all of my conversations with my fellow leaders both here in Sharm el-Sheikh and in recent days is a real determination to find a way through which allows the UK to leave the EU in a smooth and orderly way with a deal.’
Pound Australian Dollar (GBP/AUD) Exchange Rate Slips despite Brexit Delay Rumours
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slipped 0.5% this afternoon, and the pairing is currently trading at an inter-bank rate of AU$1.8221.
British Prime Minister, Theresa May, announced that the second ‘meaningful vote’ that had originally been scheduled for this week has been delayed.
May said the vote will now take place on 12 March, only 17 days before the UK is due to leave the European Union.
This will likely see MPs attempt to force the government to seek a delay.
The pairing slid over the course of the morning despite reports that May was considering whether or not to delay Brexit for up to two months.
However, during a meeting between the Prime Minister and German Chancellor, Angela Merkel the issue of extending Article 50 was brought up ‘fleetingly’.
It was also said that May reiterated that the UK wanted to leave the EU as scheduled on 29 March.
A vote is still scheduled in the House of Commons to vote on an EU withdrawal motion this Wednesday, with further votes on amendments such as the ‘Cooper’ amendment.
This amendment that could prevent a no-deal Brexit and is said to have further backing as three government ministers have added their support.
Australian Dollar (AUD) Rallies on Trump’s Tariff Delay
The Australian Dollar (AUD) opened this week’s session on a strong note following US President Donald Trump’s announcement that he would be delaying further tariffs on Chinese imports.
Sparking hope that an agreement between the two countries was within grasp, Trump tweeted:
‘I am pleased to report that the US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.
‘As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for US & China!’
A cooling of trade tensions was not the only news that buoyed the ‘Aussie’, as China rejected earlier reports it had banned coal imports from Australia at the Chinese port of Dalian.
China’s foreign ministry said on Friday that rather than banning coal imports, quality control checks had strengthened in response to shipments that did not meet environmental standards.
GBP/AUD Outlook: Will Brexit Optimism Continue to Lift Sterling?
As there is very little in the way of Australian data releases during the first half of this week’s session, the main catalyst for the currency is likely to be US-China trade tensions.
The Pound Australian Dollar (GBP/AUD) exchange rate is likely to slip if there are further reports that the US and China are closer to reaching a deal.
It is also likely that Brexit will cause movement in the pairing, as Theresa May is due to give a speech in Parliament on Tuesday.
If the Prime Minister’s speech sparks Brexit optimism it could see Sterling rise.
Also likely to cause movement in Pound exchange rates is the UK Inflation Report Hearings.
If the tone of the report is upbeat about the post-Brexit economy then it could buoy Sterling.