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Pound Australian Dollar (GBP/AUD) Exchange Rate Falls, UK-EU Brexit Talks Succumb to ‘Stupid Blame Game’

October 8, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Falls as No-Deal Brexit Fears Increase

The Pound Australian Dollar (GBP/AUD) exchange rate fell by 0.6% today, with the pairing currently trading around AU$1.813 after UK-EU talks came to the brink of collapse after this morning’s talks between Prime Minister Boris Johnson and German Chancellor Angela Merkel, which European Council President Donald Tusk said had succumbed to Boris’ ‘stupid blame game’.

Mr Tusk said:

‘What’s at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people. You don’t want a deal, you don’t want an extension, you don’t want to revoke. Quo vadis? [Where are you going?]’

Consequently, Sterling has struggled against many of its competitors today, with UK markets becoming increasingly jittery on the now heightened possibility of a UK-EU no-deal Brexit on October 31.

In UK economic news, today saw the release of the UK BRC like-for-like retail sales figure for September, which eased from -0.5 to -1.7%, its worst September since 1995.

Helen Dickinson, BRC Chief Executive, commented:

‘With four months of negative sales growth since March, the ongoing political gridlock surrounding Brexit is harming both consumers and retailers… Clarity is needed over our future trading relationship with our closest neighbours, and it is vitally important that Britain does not leave the EU without a deal.’

AUD/GBP Exchange Rate Rises on Hopes of US-China Trade Deal

The risk-sensitive Australian Dollar (AUD) rose against the Pound today on renewed hopes of a US-China trade breakthrough this week, with Vice Premier Liu He currently en route to Washington for Thursday’s talks.

However, reports that China would refuse to budge on certain essential issues have left ‘Aussie’ traders feeling cautious, with rising domestic uncertainties weighing on US President Donald Trump and providing some leeway for upcoming US-China negotiations.

Mr Trump, however, boosted confidence in a possible US-China trade breakthrough after he proclaimed ‘we think there’s a chance we could do something very substantial’.

Meanwhile, today saw the release of September’s National Australia Banks’ Business Conditions figure for September, which rose from 1 to 2.

Andrew Hanlan, an Analyst at Westpac, was downbeat in his assessment, saying:

‘As we approach the final quarter of 2019, business conditions remain stubbornly weak (despite additional policy stimulus) and business confidence has softened.’

GBP/AUD Outlook: Could Sterling Sink on UK-EU Brexit Breakdown?

Australian Dollar investors will be looking ahead to tomorrow’s release of October’s Australian Westpac consumer confidence figure, with any signs of improvement likely to further buoy the AUD/GBP exchange rate.

US-China trade developments will also remain in focus this week, with any indications of another flare-up between the world’s two largest economies likely to dampen market confidence in the risk-averse ‘Aussie’.

Brexit developments, meanwhile, will continue to drive the GPB/AUD exchange rate this week. Should relations between the UK and the EU continue to sour, we could see the Pound plummet further on the heightened risk of a no-deal Brexit this month.

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