Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as EU Agree to Brexit Delay
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped today, and the pairing is currently trading around AU$1.8781.
Sterling was left under pressure at the end of the week as the European Union announced they would agree to delay Brexit.
However, Brexit uncertainty weighed on the Pound as the bloc had not yet decided on the length of delay it would offer the UK, and work on this would ‘continue in the coming days’.
Commenting on this, Nomura FX strategist, Jordan Rochester noted:
‘It seems like [there is] this weird feedback loop of uncertainty from the UK parliament leading to the EU not making a decision, leading to the uncertainty in the UK parliament.’
MPs are now expected to consider the Prime Minister’s call for an early general election on Monday, as he confirmed he wants to hold on 12 December if the EU offers a delay until January.
However, the chances of MPs backing this motion remain slim, and this likely prompted Boris Johnson to threaten to pull his deal if Labour rejects a general election.
Australian Dollar (AUD) Rises as China is to Ensure Yuan is ‘Basically Stable’
The Australian Dollar edged up against the Pound on Friday afternoon as a fresh wave of US-China trade optimism buoyed risk appetite.
Reports revealed that the US-China trade truce that is expected to be finalised next month is going to include a clause that will ensure China will keep the Yuan’s exchange rate ‘basically stable’ in relation to a basket of currencies.
Spokeswoman for the State Administration of Foreign Exchange, Wang Chunying said that Beijing will stick to its ‘floating exchange rate system with adjustments and management’, suggesting there won’t be any major depreciation or appreciation of the Yuan.
Meanwhile, top trade negotiators, Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to hold a conference call on Friday, discussing details of the trade deal.
Pound Australian Dollar Outlook: Will Brexit Uncertainty Send GBP Lower?
Looking ahead to next week, the Pound (GBP) could slide against the Australian Dollar (AUD) as the European Union reveals the length of delay they will offer the UK.
If the EU offers a three-month delay and the Prime Minister continues to push for an early general election in December, Sterling sentiment is likely to slide.
Meanwhile, on Tuesday the Reserve Bank of Australia’s (RBA) Governor Philip Lowe is scheduled to give a speech.
The Pound Australian Dollar (GBP/AUD) exchange rate is likely to be left muted if Lowe focuses on monetary policy and his tone is overly dovish, highlighting the issues the bank is having with getting unemployment to the desired goal of 4.5%.