Latest Brexit Rejection Prompts GBP/AUD Exchange Rate Softness
UPDATE: It came as little surprise to investors when MPs voted down Theresa May’s proposed withdrawal agreement once again.
Even so, this left the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate on a weaker footing ahead of the weekend as the odds of a no-deal Brexit increased.
With the UK looking at risk of crashing out of the EU in April investors saw little incentive to favour the Pound.
Prospect of Fresh Brexit Vote Fails to Boost GBP/AUD Exchange Rate
UPDATE: With MPs set to vote on Brexit once again on Friday afternoon Pound Sterling (GBP) remained on the back foot as investors see little sign of progress.
As a breakthrough appears unlikely at this stage the GBP/AUD exchange rate continued to trend lower over the course of the afternoon.
A downgrade to the US gross domestic product reading offered a boost to the risk-sensitive Australian Dollar (AUD).
Ongoing Brexit Turmoil Continues to Drag on Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate
Brexit-based anxiety saw the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate come under renewed pressure in the wake of last night’s indicative votes in Parliament.
As none of the eight motions were able to command a majority this latest debate ultimately left MPs at a fresh impasse, encouraging investors to sell out of Pound Sterling (GBP) once again.
Although Theresa May offered to resign if MPs voted to back her previously rejected Brexit deal this was not enough to alter the political arithmetic.
Investors are uncertain of what path now remains through the ongoing uncertainty, even though the motion which attracted the highest number of votes supported a second referendum.
With a sense of clarity still distinctly lacking the GBP/AUD exchange rate was left on the back foot this morning.
Prospect of RBA Interest Rate Cut Pushes Australian Dollar (AUD) Lower Today
However, the Australian Dollar (AUD) struggled to capitalise on this latest bout of Pound Sterling bearishness.
The mood towards the antipodean currency continued to sour today in the wake of the Reserve Bank of New Zealand’s (RBNZ) unexpectedly dovish signal.
With the RBNZ looking set to cut interest rates in the month ahead pressure has increased on the Reserve Bank of Australia (RBA) to follow suit.
AUD exchange rates softened on the prospect of interest rates seeing any further cuts, especially as a wider sense of anxiety over the global growth outlook persisted.
Deteriorating UK Consumer Confidence Set to Weigh on GBP/AUD Exchange Rate
Friday’s UK GfK consumer confidence index could put further pressure on the GBP/AUD exchange rate, with forecasts pointing towards a fresh decline on the month.
As long as consumer sentiment continues to sour in the face of Brexit tensions the mood towards the Pound is likely to deteriorate further.
If the index dips from -13 to -14 as forecast this could leave GBP exchange rates in a sharp downtrend ahead of the weekend.
However, even a disappointing consumer confidence index reading could be overshadowed if there are signs of progress towards a positive Brexit resolution.
If Parliament manages to break its stalemate over Brexit the appeal of Pound Sterling could improve markedly, reversing its recent bout of weakness.
Australian Dollar (AUD) Support Limited amid Risk Aversion
Support for the Australian Dollar, meanwhile, looks set to diminish further ahead of the weekend unless market risk appetite improves.
However, if the latest raft of US economic data proves disappointing this could offer AUD exchange rates a boost.
A weaker US Dollar (USD) may encourage the Australian Dollar to recover some of its lost ground in the short term, even in the face of lingering jitters over the global growth outlook.
Fresh signs of strength from the US economy, though, may encourage the GBP/AUD exchange rate to return to a stronger footing.