Pound to Australian Dollar Exchange Rate Plummets, Johnson to Rule Out any Brexit Delay?

GBP/AUD Exchange Rate Retreats as Johnson Heads to Luxembourg

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending lower this morning as markets brace for Boris Johnson’s meeting with European Commission President, Jean-Claude Juncker this afternoon.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8079, having slipped around 0.5% so far this morning.

Pound (GBP) Tumbles ahead of Johnson-Juncker Meeting

The Pound (GBP) opens this week’s session on the back foot, relinquishing some of the gains seen on Friday.

GBP exchange rates surged last week on renewed hopes of the UK and the EU finalising a withdrawal deal by the end of October.

However, EU officials subsequently poured cold water on this over the weekend, suggesting the UK is still yet to table any actionable plans to replace the controversial Irish backstop.

On top of this, it’s thought that Boris Johnson will tell Jean-Claude Juncker that he is not prepared to delay Brexit beyond 31 October when they meet today for a working lunch.

This suggests the PM may be willing to flout a law compelling him to seek another Brexit extension from the EU, much to the chagrin of GBP investors.

Australian Dollar (AUD) Buoyed by US-China Trade Optimism, But is Risk Sentiment Turning?

The Australian Dollar (AUD) is pressing its advantage against the Pound (GBP) this morning as recent US-China trade optimism continues to underpin AUD exchange rates.

Hopes for an interim deal being struck between the two powers when officials meet for high-level talks next month, has helped to stoke demand for the trade-sensitive ‘Aussie’ in recent days.

However the drone attacks on Saudi oil facilities over the weekend threatens to undermine market risk appetite going forward.

Analysts at Australia and New Zealand Banking Group suggest:

‘Facilities at the Abqaiq and Khurais oil fields were attacked by drones at 4am local time on Saturday. We expect the market to quickly price in a sizeable geopolitical risk premium.’

US has already pointed the finger at Iran, with President Donald Trump already threatening military action in response. Such a development would likely prove negative for the risk-sensitive Australian Dollar.

GBP/AUD Forecast: Will RBA Minutes Hint at Possible October Rate Cut?

Looking ahead, the Pound to Australian Dollar (GBP/AUD) exchange rate could see some movement overnight as the Reserve Bank of Australia (RBA) publishes the minutes from its September policy meeting.

The RBA voted to keep rates on hold this month after two consecutive rate cuts in June and July. But with global economic headwinds continue to grow, could the minutes show there is still some appetite for further cuts amongst policymakers?

Expect to see the ‘Aussie’ slide if the minutes signal an October rate cut may be on the cards.

While keeping one eye on Brexit developments, GBP investors may look to the UK’s latest CPI figures for fresh impetus in Sterling.

Wednesday’s release is expected to show inflation slowed slightly in August, potentially weighing on the Pound as we go into the Bank of England’s (BoE) latest policy decision on Thursday.

Matthew Andrews

Contact Matthew Andrews