The Pound Australian Dollar (GBP AUD) exchange rate fluctuated again this morning as Brexit jitters continued to shadow the pairing.
Sterling (GBP) Rocked by Brexit Uncertainty
The Pound has found itself on a bit of a rollercoaster in the second half of this week’s session as a lull in economic data lead investors to focus on the conclusion of the fifth round of Brexit talks.
Michel Barnier’s closing statements marked the start of Sterling volatility as the EU’s chief negotiator suggested that there was a ‘deadlock’ in talks over the issue of the UK’s ‘divorce’ bill.
However the Pound’s fortunes were quickly reversed as Germany’s Handelsblatt newspaper reported that the EU would be willing to offer the UK a two-year transitional deal should the issue of the Britain’s exit bill be addressed.
Aiding Sterling’s advance this morning were media reports of a draft document from the EU suggesting that officials are beginning to prepare for post-Brexit trade negotiations and that talks could start as early as December.
However the Pound’s turbulent journey appears to be far from over this week as European Commission President Jean-Claude Juncker stuck a more wary tone as he addressed the recent talks on Friday as he again reiterated that the UK must settle its financial obligations with the EU before talks can progress.
Chinese Trade Figures Strengthen Australian Dollar (AUD)
Meanwhile the Australian Dollar was bolstered in overnight night trade by strong that expected Chinese trade figures, with investors being particularly impressed by the country’s export growth as it rocketed up to 18.7% in September.
With China being the largest single destination for Australian exports the uptick in Chinese demand suggests that Australia’s trade surplus may surge in the second half of the year.
GBP AUD Forecast: UK Inflation Figures to Prompt BoE Rate Hike?
Looking ahead to the coming week all eyes will be on the UK’s latest CPI figures, with a rise in inflation likely to propel the GBP AUD exchange rate higher.
Tuesday’s figures will be particularly important as it will be the final inflation reading ahead of the Bank of England’s (BoE) next interest rate decision, with another rise in inflation likely to increase the pressure on the bank to hike rates in November.
Meanwhile the Australian Dollar may tumble at the start of next week should investors be left disappointed by the minutes from the most recent Reserve Bank of Australia (RBA) policy meeting.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.6938 and the AUD GBP exchange rate was trending around 0.5903.
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