GBP/AUD Exchange Rate Muted amid Brexit Concerns
The Pound Australian Dollar (GBP/AUD) exchange rate is stuck in a narrow range today, as Brexit headlines continue to drag on Sterling sentiment.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8264, virtually unchanged from this morning’s opening rate.
Pound (GBP) Rangebound on Brexit Jitters
The Pound is struggling to find any clear directional bias against the Australian Dollar (AUD) and the majority of its other peers this morning amidst lingering Brexit uncertainty.
Following a lack of progress in the latest round of trade talks between the UK and EU last week, the EU’s Chief Negotiator Michel Barnier is reported to have branded the UK’s draft Brexit deal as ‘unrealistic’.
EU sources accused the UK’s proposals of not directly addressing the EU’s core concerns, such as ensuing a level playing field and the method of resolving future disputes once the UK leaves the jurisdiction of the European Court of Justice.
One EU source said:
‘Outsiders don’t realise how pessimistic we’ve become.
‘We expect the mood to switch rapidly to contingency planning, in expectation the UK will throw itself into the blame game rather than the end game.
‘The idea that if we do end up with no deal it’ll be because the EU underestimated the UK’s determination is misplaced.’
However, while the risks of a no-deal Brexit continue to rise the Pound remains well positioned against many of its peers, leading some analysts to warn that there is some complacency on the side of GBP investors.
Francesco Pesole, a foreign exchange strategist at ING, suggests:
‘In our view, this continues to highlight how GBP is underpricing the risk of a no-deal outcome of current UK-EU trade negotiations, which in turn flags a non-negligible risk of more stress being built into Sterling in the coming weeks.’
Australian Dollar (AUD) Side-lined Ahead of Jackson Hole
At the same time, the Australian Dollar (AUD) is struck in a narrow range this morning amid a softening risk tone ahead of the Federal Reserve’s annual Jackson Hole Symposium.
The Symposium is clearly this week’s main risk event and could stoke some notable volatility in not just the US Dollar (USD) but wider currency market due to the potential implications of the Fed’s monetary policy on global growth.
Further limiting movement in AUD exchange rates are lingering US-China trade concerns, as despite an easing of tensions in recent days, there remains a clear risk of the two-powers trade spat rippling through the global economy.
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