October 21, 2019 - Written by John Cameron
STORY LINK Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Falls as PM Awaits Speaker’s Decision on ‘Meaningful Vote’
Pound Australian Dollar (GBP/AUD) Exchange Rate Slumps as PM Pushes for ‘Meaningful Vote’
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped on Monday and the pairing is currently trading around AU$1.8872.
Sterling slumped at the start of the week against the risk-sensitive ‘Aussie’ after Downing Street said the Prime Minister was going to push for a vote on his Brexit deal.
Over the weekend, Boris Johnson was forced by law to send the European Union a letter requesting a Brexit extension, although he did not sign the letter.
While the government is now seeking a straight ‘yes’ or ‘no’ answer on a ‘meaningful vote’, it is unclear whether the House of Commons Speaker, John Bercow will allow this as it was debated on Saturday.
Number 10 said parliament must be given ‘a straight up-and-down vote’ on Johnson’s deal.
Sterling slipped against AUD despite analysts stating the chance of the UK crashing out of the bloc without a deal has decreased, which likely sparked an upswing in risk-appetite, buoying the 'Aussie'.
Added to this, the Prime Minister’s chance of winning parliamentary approval for his deal is high.
Commenting on this, chief UK economist at BNP Paribas, Paul Hollingworth noted:
‘The UK leaving the EU with a deal remains the most likely ultimate outcome, in our view, although not necessarily by Oct. 31. [I expect] bullish sentiment to persist.’
Australian Dollar (AUD) Rises on US-China Trade Optimism
The risk-sensitive Australian Dollar edged up on Monday after hopes for progress towards a US-China trade deal increased and the belief the UK will avoid a chaotic exit from the EU.
At the end of last week, US President Donald Trump struck an optimistic tone and stated he believed a trade deal would be signed before next month’s Asia-Pacific Economic Cooperation meeting in Chile.
Commenting on this, investment manager at Unigestion in Geneva, Jeremy Gatto stated:
‘They seem to [be] making progress. But we have seen in [the] past that everything seems to look great and then a couple of days later seems to deteriorate again.
‘Trump realizes that some of the tariffs that potentially could be implemented towards the end of the year could affect the consumer, which would be bad for the US economy – and obviously bad for him.’
Pound Australian Dollar Outlook: Will a Dovish RBA Weigh on AUD?
Looking ahead to Tuesday evening, the Australian Dollar (AUD) could slide against the Pound (GBP) following a speech from the Reserve Bank of Australia’s (RBA) Christopher Kent.
If the RBA’s assistant governor mentions monetary policy and focuses on the ongoing issue of high unemployment, ‘Aussie’ sentiment could slump.
Meanwhile, Brexit is likely to remain the main catalyst for movement in Sterling as the 31 October deadline creeps closer.
If it revealed on Monday afternoon that the Speaker of the House of Commons allows the Prime Minister to schedule his ‘meaningful vote’, the Pound Australian Dollar (GBP/AUD) exchange rate is likely to rise.
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TAGS: Pound Australian Dollar Forecasts