Pound Australian Dollar (GBP/AUD) Exchange Rate Increases Ahead of Next Week’s Fed Rate Decision
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rose 1% and the pairing is currently trading at around AU$1.8140.
Sterling received an upswing of support as fears the UK will crash out of the European Union without a deal next month continue to subside.
However, the British currency still remains vulnerable as the details of the UK’s divorce from the EU remain unclear.
Meanwhile, markets have turned to next week’s Federal Reserve meeting after the European Central Bank’s (ECB) decided to introduce a fresh stimulus package to try and bolster the economy.
The ‘Aussie’ was left under pressure as risk sentiment decreased due to expectations the Fed is going to cut rates after slashing rates for the first time in a decade in July.
Australian Dollar (AUD) Slides despite Trade Optimism
Meanwhile, the risk-sensitive Australian Dollar slumped as this week’s earlier upswing in risk appetite faded away.
Earlier this week both the US and China made gestures of goodwill in the form of tariff delays and renewing purchases.
As the two largest economies prepare for in-person trade talks, US President Donald Trump said he would prefer a comprehensive trade deal with China.
However, he did not rule out the possibility of an interim pact, despite an ‘easy’ trade deal not being possible.
Speaking to reporters at the White House on Thursday, the President stated:
‘I’d rather get the whole deal done. I see a lot of analysts are saying an interim deal, meaning we’ll do pieces of it, the easy ones first. But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something I would consider I guess.
Pound (GBP) Rallies despite Draghi Brexit Comments
Sterling rose against the ‘Aussie’ at the end of the week despite ECB President Mario Draghi’s comments on Thursday about Brexit.
In his last major announcement, the ECB president stated the likelihood of the UK crashing out of the EU had increased.
In the press conference following the central bank’s decision, Draghi noted that in ‘the case of a hard Brexit […] the probability of which has gone up over recent time’.
Pound Australian Dollar Outlook: Will Brexit Uncertainty Keep GBP Under Pressure?
Looking ahead to the start of next week it is likely the Pound (GBP) will remain under pressure thanks to Brexit uncertainty.
Meanwhile, the Australian Dollar (AUD) could continue edge up against Sterling following the release of China’s industrial production data.
If August’s industrial production rises higher than forecast, it could cause an upswing in risk-appetite and buoy the Australian Dollar.