GBP/AUD Exchange Rate Flat as Markets Await EU Response to Brexit Debacle
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is rangebound this morning as markets await the EU’s response to the latest Brexit developments
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8790, down roughly a cent from Tuesday’s best levels, but virtually unchanged from this monring’s opening rate.
Pound (GBP) Left Struggling After MP’s Reject Boris Johnson’s Brexit Timetable
The Pound (GBP) is nursing its wounds this morning following a sharp sell-off on Tuesday, after Boris Johnson ‘paused’ his Withdrawal Agreement Bill.
Johnson placed the bill in limbo after MP’s rejected his timetable to rush it through parliament by the end of the week.
GBP investors were dismayed by the vote as it cast renewed uncertainty over the whole Brexit process.
Much to the chagrin of Brussels, the ball now appears to be back in the EU’s court as EU leaders mull over whether to extend the Brexit deadline past 31 October.
EU Council President Donald Tusk, has recommend EU leaders back another delay as to avoid a no-deal Brexit.
Johnson was compelled by law to write a letter to the EU requesting a three-month extension over the weekend.
If such an extension is granted the PM has said he will push for a general election to be held before Christmas, the uncertainty of which could infuse fresh volatility into Sterling.
Australian Dollar (AUD) Undermined by Fading Trade Optimism
Meanwhile the Australian Dollar (AUD) is struggling to capitalise on the Pound’s (GBP) weakness this morning as market risk appetite begins to sour.
Hopes of a US-China trade deal being signed in November underpin the recent risk-on mood in markets, bolstering demand for the trade-sensitive ‘Aussie’.
President Donald Trump has frequently taken to Twitter to proclaim his desire to sign off on a ‘phase 1’ trade deal when he meets his Chinese counterpart XI Jinping at November’s APEC summit.
However, US Commerce Secretary, Wilbur Ross has sought to downplay the chances of such a deal being signed next month.
Speaking to Fox Business Network earlier in the week, Ross said:
‘It has to be the right deal, and it doesn’t have to be in November. It’s more critical that it be a proper deal that exactly when it occurs.’
Optimism was dented further by White House Economic Advisor, Larry Kudlow, who suggested a number of issues remained unresolved and could spill over into ‘phase 2’ talks.
GBP/AUD Forecast: Brexit to Remain in Focus
Unsurprisingly, we can expect Brexit to continue to act as the main catalyst for movement in the Pound to Australian Dollar (GBP/AUD) exchange rate for the time being.
Therefore it seems safe to assume that Sterling will continue to be met by volatility through the remainder of the week, especially amidst a lull in notable data that could distract from the whole ordeal.
Meanwhile, the publication of Australia’s latest PMI figures will be in focus overnight.
This could put some more pressure on the Australian Dollar if growth in the country’s private sector continued to slow this month, particularly if the manufacturing sector contracted as forecast.