GBP/AUD Exchange Rate Muted Following Brexit Drama over the Weekend
The Pound Australian Dollar (GBP/AUD) exchange rate is on the back foot this morning, with markets skittish after a ‘meaningful vote’ on Boris Johnson’s Brexit deal was unexpectedly postponed.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8875, down roughly 0.3% from the week’s opening levels.
Pound (GBP) Faces another Volatile Week
All eyes are on the Pound (GBP) again at the start of this week as the Brexit saga continues.
Sterling initially slumped on the opening bell this week, with the Brexit drama over the weekend taking its toll on market sentiment.
MPs were due to hold a ‘meaningful vote’ on Boris Johnson’s Brexit deal in an extraordinary sitting of parliament on Saturday.
However, proving once again that nothing is ever straight forward when it comes to Brexit, the vote was delayed, after MPs instead voted to back an amendment to withhold approval until the necessary legislation was in place.
Undeterred but Saturday’s setback, Johnson is pushing for a simple yes/no vote on his deal to be held at the start of this week.
Most importantly for GBP investors however is the speculation that Johnson may just have the numbers needed to push his deal through parliament.
Analysts suggest a narrow shift in parliamentary arithmetic since the weekend could see the deal pass with a majority of just one or two, helping the Pound to recoup some of its initial losses.
Should Johnson get his vote and succeed in passing his deal then we can expect to see Sterling move sharply higher.
Conversely if the vote doesn’t go ahead or the deal is rejected by MPs then we could be looking at a significant sell-off of the Pound, whose recent gains have entirely centred on the UK and EU finalising a Brexit deal.
Australian Dollar (AUD) Buoyed by Positive Trade Headlines
At the same time, the Australian Dollar (AUD) opened this week’s session on strong footing, in response to some positive global trade developments.
Late last week, Chinese Vice Premier Liu He said Beijing is open to working with the US to resolve one another’s trade concerns and that this would be in the best interest for both countries as well as the global economy.
President Donald Trump has also struck a positive tone, stating that he hopes a deal will be signed by mid-November in time for the Asia-Pacific Economic Cooperation meeting.
Australia’s economy is highly exposed to global trade conditions, so the latest headlines were welcomed by AUD investors.