GBP/AUD Exchange Rate Muted as Markets Take Objective look at State of Brexit Negotiations
The Pound Australian Dollar (GBP/AUD) exchange rate is currently flat this morning, as markets begin to sober up after catapulting the pairing to a five-month high on Friday.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8585, virtually unchanged from today’s opening rate.
Pound (GBP) in the Balance as Brexit Talks Intensify
All eyes are on the Pound (GBP) this week as intensified Brexit negotiations look to dominate headlines.
This comes off last week’s buying frenzy, which saw Sterling enjoy its strongest two-day bump since Brexit and propelled GBP/AUD to a five-month high.
However so far the Pound is struggling to maintain its momentum this week after both the UK and EU warned that there are major gaps which must be cleared before a Brexit deal can be secured.
UK Prime Minister Boris Johnson told his cabinet that while he can see ‘a way forward’ that there is still a ‘significant amount of work’ to be done.
The EU echoed these comments, suggesting ‘a lot of work remains to be done’.
With Sterling possibly being overbought last week, there is certainly some scope for GBP selling this week, with GBP exchange rates likely to come crashing back down to earth if a deal can be not be found.
Alternatively should the UK and EU be able to hammer out at least the basis for deal ahead of the upcoming EU summit then the skies the limit for the Pound, as we could see it rise to its best levels since the EU referendum.
Worrying Chinese Data Cast Shadow over the Australian Dollar (AUD)
At the same time, the Australian Dollar (AUD) is also facing headwinds at the start of this week, after market risk appetite weakened.
This comes in the wake of China’s latest trade figures, as they revealed that both imports and exports deteriorated in September.
The sharp contraction of imports was particularly worrying for AUD investors, due to China being the Australia’s single largest export market.
Meanwhile, news of a tentative ‘phase 1’ trade deal between the US and China, failed to provide much support for the ‘Aussie’ especially after it emerged that Beijing wanted more talks before signing off on the deal.