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Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Falls as House of Commons Face Brexit Deadlock

March 28, 2019 - Written by John Cameron

Pound Australian Dollar (GBP/AUD) Exchange Rate Slides Ahead of Further Brexit Debate

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate continued to slide this afternoon and the pairing is currently trading at an inter-bank rate of AU$1.8484.

Sterling fell as the Brexit process was stuck in deadlock as MPs struggled to reach a consensus on the next steps.

This afternoon, Commons Leader, Andrea Leadsom told MPs that further debate on a government motion on Brexit would continue on Friday.

However, it still remains unclear whether or not this will result in a third ‘meaningful vote’ on Prime Minister Theresa May’s Brexit withdrawal agreement.

Pound (GBP) Falls as MPs Fail to Reach Consensus

After seizing control of the Brexit process, the House of Commons failed to reach a consensus following last night’s indicative votes.

All eight options were rejected, although the two that received the largest amount of support were the options for a second referendum and to remain in a customs union with the European Union.

Meanwhile, Prime Minister Theresa May continued her attempts to persuade MPs to back her Brexit withdrawal agreement.

Yesterday, the Prime Minister promised to resign if her deal was approved, and while this did increase support for her deal and likely caused the Pound to rise, Brexit pessimism weighed on Sterling on Thursday.

A number of hardcore Brexiteers still continue to refuse to vote in favour of her deal and the Democratic Unionist Party (DUP) have also stated they refuse to alter their stance.

Progress in US-China Trade Talks Buoys Australian Dollar (AUD)

It has been reported that China made unprecedented proposals in talks with the United States on a wide number of issues.

It is likely this caused an increase in risk-appetite among investors, boosting the Australian Dollar (AUD).

US officials said that progress has been made in all areas of discussions between themselves and China, even the slightly more sensitive issue of forced technology transfers.

Commenting on the progress made during US-China discussions in Beijing, an unnamed US official said:

‘If you looked at the texts a month ago compared to today, we have moved forward in all areas.

‘[…]They’re talking about forced technology transfer in a way that they’ve never wanted to talk about before – both in terms of scope and specifics.’

Australian Dollar (AUD) Rises despite RBA Rate Cut Fears

The Australian Dollar (AUD) fell heavily on Wednesday following dovish commentary from the Reserve Bank of New Zealand (RBNZ).

The RBNZ adopted an easing bias, suggesting that interest rates may be cut again.

This increased speculation about a potential cut by the Reserve Bank of Australia (RBA) despite the bank holding a neutral outlook.

However, the 'Aussie' continued to rise against Sterling (GBP) over the course of Thursday.

Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Slide on US-China Trade Talk Breakthrough?

Looking ahead to the start of Friday’s session, it is likely the Pound (GBP) will slide against the Australian Dollar (AUD) following the release of the UK’s GfK consumer confidence.

If consumer confidence contracts from -13 to -14 in March, sentiment in Sterling could be dampened.

The Pound may slide further if Theresa May struggles to gain support for her Brexit withdrawal agreement.

It is likely that risk appetite will rise amongst investors if there are further reports suggesting that the trade talks in Beijing are progressing successfully.

If there are signs the USA and China are close to coming to a trade agreement, the Pound Australian Dollar (GBP/AUD) exchange rate could slide.

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