GBP/AUD Exchange Rate Muted on Brexit Uncertainty
The Pound Australian Dollar (GBP/AUD) exchange rate is rangebound this morning as continued Brexit uncertainty leaves investors increasing wary of Sterling.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8144, virtually unchanged from today’s opening rate.
Has the Pound (GBP) Got Further to Fall?
The Pound (GBP) has come under some significant pressure so far this week, mostly in response to recent headlines suggested that Brexit negotiations are on the verge of collapsing.
Talks appear all but dead according to sources within Downing Street, who said on Tuesday that it is now ‘essentially impossible’ to reach a deal as the EU refuses to budge ‘even one centimetre’.
There was a brief glimmer of hope early on Wednesday after the EU reportedly threw the UK a ‘lifeline’ with a concession on the backstop, but this quickly rejected by the DUP wiping out Sterling’s tentative gains.
While most analysts agree that another delay looks to be the most likely outcome, there remains the risk that Boris Johnson could attempt to torpedo any offer of an extension from the EU.
As a result the threat of a no-deal looms large over the Pound, the risk of which could drive GBP exchange rates lower as we near the Brexit deadline on 31 October.
Australian Dollar (AUD) Faces Pressure as US-China Trade Breakthrough Appears Unlikely
While the Australian Dollar (AUD) is currently holding its ground, the risk sensitive currency looks likely to face headwinds as we enter the second half of the week.
This comes as US and Chinese trade officials are due to meet in Washington for high level talks, which appear to be on the rocks before they have even begun.
At the start of the week Beijing indicated that its industrial policy and government subsidies weren’t up for discussion, two key points of contention for the US.
At the same time the US government has placed visa restrictions on Chinese officials reportedly involved in the repression of the Xinjiang region.
David Madden, market analyst at CMC Markets says:
‘Traders aren’t overly optimistic for the trade talks that will take place tomorrow. Its’s not a great sign that tensions are already creeping up in advance of the negotiations, but at least they are going ahead.’
This leaves the Australian Dollar poised to tumble later this week, should the talks end acrimoniously.