GBP/AUD Exchange Rate Rangebound amid Brexit Delay
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning amid reports that the UK has formally requested another Brexit extension from the EU.
At the time of writing the GBP/AUD exchange rate is down slightly, leaving the pairing trading at around AU$1.84.
Pound (GBP) Stabilises as May Asks for Further Brexit Delay
After falling back yesterday, the Pound (GBP) appears to have stabilised against the Australian Dollar (AUD) this morning as Theresa May asks the EU to delay Brexit until 30 June.
The UK is currently set to leave the EU on 12 April but MPs are still unable to approval a Brexit withdrawal agreement.
However Parliament is also against the UK leaving the EU without a deal, leading Theresa May to offer an olive branch to Labour leader Jeremy Corbyn in an attempt to come up with a cross-party solution that would be amenable to Parliament.
Despite suggestions that the talks have been ‘productive’, analysts suggest it is unlikely that a new deal will be ready in time for next week’s emergency EU summit, likely prompting May’s request for another extension.
The request comes shortly after European Council President Donald Tusk proposed a 12-month ‘flexible’ extension to Brexit, which would allow the UK to leave earlier if it is able to finalise a deal.
According to a recent Reuters poll of foreign exchange strategists, Sterling would likely climb around 1.75% if it’s confirmed that the UK will be granted a longer extension.
Australian Dollar (AUD) Buoyed by US-China Trade Optimism
Meanwhile the Australian Dollar (AUD) remains resilient this morning as it is supported by rising US-China trade optimism.
This comes amid reports that China is willing to acknowledge a number of issues outlined by the US, bolstering hopes that the two sides will sign off on a new trade deal, much to the relief of investors.
Strategists at ANZ Bank said:
‘Beijing has acknowledged the issues the US has regarding intellectual property theft, forced technology transfer and cyber hacking. This acknowledgement was welcomed by the markets.
‘Also supportive was Trump’s assertion that ‘China will be buying a lot of product from the US.’
GBP/AUD Exchange Rate Forecast: Will the EU Accept May’s Brexit Delay?
Looking ahead, the future direction of the Pound Australian Dollar (GBP/AUD) exchange rate may be driven by whether or not the EU will be willing to grant May her Brexit extension request.
The EU has previously refused a request to delay Brexit until June for fear it would disrupt EU elections, leading to the current date of 12 April, so it remains to be seen if anything has changed this time around.
Meanwhile, the release of the latest US Non-Farm Payrolls report may impact the Australian Dollar (AUD) later this afternoon, with the ‘Aussie’ potentially gaining if another weak payroll print in March dampens demand for the US Dollar (USD).