GBP/AUD Exchange Rate Muted amid Brexit Uncertainty
The Pound Australian Dollar (GBP/AUD) exchange rate is currently rangebound, with renewed Brexit uncertainty limiting any upside in Sterling.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8887, virtually unchanged from today’s opening rate.
Pound (GBP) Side-lined as Markets Await EU Brexit Response
The Pound (GBP) remains directionless this morning while markets wait for a response from the EU regarding the UK’s request for another extension to the Brexit deadline.
Attempts to get a Brexit deal through parliament have stalled. Boris Johnson ‘paused’ his Withdrawal Agreement Bill after MP’s rejected his timetable for fast-tracking the legislation through parliament by the end of the week.
With it now looking impossible for the UK leave with a deal by 31 October, the ball is back in the EU’s court over whether to grant another extension to the deadline.
Then there is also the question of how long any delay should be.
President of the European council, Donald Tusk has recommended that EU leaders agree to delay Brexit until the end of January.
Johnson has stated in the event of a three-month delay he would seek a snap election to try and break the deadlock in Parliament.
However, some within the EU, such as France’s president, Emmanuel Macron are thought to be pushing for a short technical extension, in order to keep UK MP’s focused on the deal in front of them.
The EU is expected to announce its decision on Friday, likely leaving Sterling without a clear directional bias until then.
Australian Dollar (AUD) Weakens, Gloomy PMI Figures to Make RBA Rate Cut More Likely?
The Australian Dollar (AUD) drifted lower in early trade on Thursday in response to some lacklustre PMI figures.
According to data published by the Commonwealth Bank of Australia (CBA), the service sector expanded far slower than expected this month, with the index printing at 50.8 against estimates of a more robust reading on 52.2.
While the accompanying manufacturing index came in better than forecast, narrowly staving off an expected contraction, this was not enough to make up for the slowing of the more influential services index.
This is a poor start to the fourth quarter and is expected to put even more pressure on the Reserve Bank of Australia (RBA) to continue cutting interest rates, expectations of which are likely to limit any upside potential in the ‘Aussie’ in the near-term.