GBP/AUD Exchange Rate Pressured by Brexit Uncertainty
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is racing lower this morning as a draft Brexit deal hangs in the balance due to opposition from the Democratic Unionist Party (DUP).
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8855, down roughly 0.6% from this morning’s opening rate.
Pound (GBP) Retreats as DUP Threatens to Derail Deal
The Pound (GBP) is facing some selling pressure this morning amidst fears that a last minute Brexit deal could be scuppered by the DUP.
On the morning of a crunch EU summit, the DUP released a statement outlining the party’s opposition to the draft deal that has been hammered out by the UK and EU over the past week.
DUP says it cannot support Boris Johnson's Brexit deal https://t.co/rd6vhVr6Uc
— Guardian politics (@GdnPolitics) October 17, 2019
The DUP’s statement read:
‘As things stand, we could not support what is being suggested on customs and consent issues and there is a lack of clarity on VAT.
‘We will continue to work with the government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom.’
The DUP’s support is seen as crucial if the deal is to pass through parliament, with a number of hardline Conservative Brexiteers signalling they will take their cues from the DUP.
Unsurprisingly the reaction by markets has been one of disappointment, with skittish investors steering clear of the Pound this morning.
Australian Dollar (AUD) Surges on Upbeat Jobs Report
The Australian Dollar (AUD) is enjoying significant support this morning as markets cheered the release of Australia’s latest jobs report.
According to data published by the Australian Bureau of Statistics (ABS), the unemployment rate unexpectedly fell from 5.3% to 5.3% in September, reversing August’s shock rise.
Aside from the positive headline figures, the jobs report also revealed a rebound in full-time employment last month, with full-time positions rising by 26,000.
While the drop in unemployment will be welcomed by the Reserve Bank of Australia (RBA), analysts suggest it won’t be enough to dissuade the bank from further easing.
Marcel Thieliant, an economist at Capital Economics said:
‘The RBA will breathe a sigh of relief after the unemployment rate dipped. But we think it won’t be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus.
‘We expect the RBA to cut interest rates to 0.5% in December.’
GBP/AUD Forecast: All Eyes on EU Summit
A two-day summit of EU leaders will get underway later today, and the question on everybody’s lips will be whether or not the UK and EU will be able to approve a Brexit deal.
As things stand, with the DUP’s refusal to play ball this is looking unlikely and as such the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to face further losses throughout the session.
However, with intense negotiations between Boris Johnson and leaders of the DUP set for this morning, Sterling remains poised to rally if the PM is able to salvage the deal.