GBP/AUD Exchange Rate Rangebound as Brexit Returns to Focus
The Pound to Australian Dollar (GBP/AUD) exchange rate is trading just shy of an eight-month low this morning as no-deal Brexit concerns limit the appeal of the pairing.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8531, virtually unchanged from this morning’s opening rate.
Pound (GBP) Faces Pressure Ahead of Key Brexit Conference
The Pound (GBP) looks set to face considerable headwinds in the coming weeks ahead of a ‘high-level conference’ between the UK and EU in June to determine whether enough progress has been made in Brexit negotiations.
Ahead of the conference there will be one final round of talks, but despite reports the EU is willing to make concession on fisheries there is little hope for a breakthrough being found.
EU sources warn that the UK needs to do more to ensure a level playing field if a stalemate is to be avoided.
An EU official said:
‘This is a crucial round. If there is no parallel progress – level playing field, protection of fundamental rights and governance – then we risk going into July with a major problem, the stalemate [EU chief negotiator] Michel Barnier warned about.’
The EU has said that July will be the last chance for the UK and EU to decide on whether to extend the Brexit transition period.
However, the UK government has repeatedly ruled out allowing the transition period to extend past December, stoking fears that the UK will face a no-deal Brexit at the end of 2020.
US-China Tensions to Limit Upside in Australian Dollar (AUD)?
At the same time, the Australian Dollar (AUD) may face some hurdles in the coming weeks as escalating tensions between the US and China threatens to weigh on market risk appetite.
This comes as the two powers are engaged in a war of wars over the status of Hong Kong and Beijing’s plans to impose a controversial new security law on the city.
The latest development has seen the White House announce that it no longer views Hong Kong as autonomous from China, paving the way for the US to end special trade relations with the city.
Beijing has already vowed to hit back at any action taken by the US in retaliation to the security law, stoking fears the trade war between the two countries could be revived.
Any moves to impose fresh tariffs would likely weigh heavily on market sentiment as leave the risk-sensitive Australian Dollar in the lurch.