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Pound Australian Dollar Forecast: Sterling Slump Possible on Brexit Disagreements

The Pound has posted a minor rise against the Australian Dollar on July 20th, up to 1.6408. This represents a minor recovery, but comes after progressive losses from a high of 1.7114 in early June.

Pound to Australian Dollar Losses Possible if Brexit Talks Turn Sour

As the second round of Brexit talks continue, the Pound remains vulnerable to any setbacks or shock developments from negotiations.

The second round of Brexit talks started on July 17th, following an awkward pause at the end of the first round. The lingering issue has been the rights of EU citizens in the UK and vice versa.

Outlining the EU’s position in the second round of talks, Michel Barnier has stated that ‘in [the] second step, we will scope our future relationship’.

Before the second round started, Brexit Secretary David Davis stressed that;

‘Protecting the rights of all our citizens is the priority for me going into this round and I’m clear that it’s something we must make real progress on’.

While this put talks off on a tentative positive step, there are still a wide range of issues to be addressed. Among these are the UK’s commitments to the EU, which Conservative Peer Baroness Anelay has spoken on;

‘The government recognises that the UK has obligations to the EU, and the EU obligations to the UK, that will survive the UK’s withdrawal — and that these need to be resolved’.

Should UK-EU Brexit talks continue in an amenable fashion then the Pound could appreciate, while any signs of widening rifts between the UK and EU may result in sporadic GBP devaluations.

Australian Dollar Outlook: AU Economic Downturn could Bring Sharp AUD Slump

Following a Westpac-MI leading index result, the chances of Australian Dollar stability in the future have decreased notably.

The Westpac index gives a 3-9 month forecast for economic movement and has posted a -0.76% result for June.

This means that an Australian economic slowdown could come in 2017 and 2018, which may progressively weaken the Australian Dollar.

This could also lead to the Reserve Bank of Australia (RBA) downgrading its growth and inflation forecasts for the near-term. Another such pessimistic development could have an additional negative effect on the Australian Dollar’s value.

Recent Interbank GBP AUD Exchange Rates

At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trading at 1.6383 and the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.6102.

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