October 24, 2019 - Written by John Cameron
STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Falls as Macron Pushes for 15 Day Delay
Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as PM Braces for EU27’s Decision
The Pound Australian Dollar (GBP/AUD) exchange rate was left edged down on Thursday afternoon, and the pairing is currently trading at around AU$1.8809.
The pairing was left flat as Brexit uncertainty crept back up on the Pound and investors awaited the decision of whether or not the European Union would allow a Brexit extension.
The EU27 are expected to give their decision on Friday, and while they have signalled a willingness to offer an extension, the length has been debated and created further uncertainty that has weighed on GBP.
While both German Chancellor Angela Merkel and Irish Taoiseach Leo Varadkar have argued a delay to January would be the best course of action, French President Emmanuel Macron has pressed for an extension of no longer than 15 days past the original October 31 deadline.
Commenting on this, Hussein Sayed, FXTM Chief Market Strategist stated:
‘Although the French are pushing for a tighter deadline, the base case scenario remains until January 31. If this extension is granted, then a UK general election will likely be the next step.
‘If an election is called and approved by the House of Commons, expect to see more volatility in Sterling, although any downside pressure will be limited given that a hard Brexit scenario is now off the table.’
Australian Dollar (AUD) Rangebound Ahead of Mike Pence Speech
The Pound Australian Dollar (GBP/AUD) exchange rate was left rangebound on Thursday as little domestic data filtered through during today’s session.
Meanwhile, risk appetite was left dampened ahead of US Vice President Mike Pence’s speech as traders were concerned he would highlight the human rights abuses of China.
Although a year after Pence’s hawkish speech caused uproar in China and heightened tensions, the Vice President is expected to strike a gentler tone which likely allowed the 'Aussie' to rise against the Pound later in the afternoon.
Meanwhile, Republicans lawmakers have made attempts to get President Donald Trump to pass a Hong Kong human rights bill which could spark further tensions.
Any progress on this bill or harsh comments about Beijing from the Vice President could weigh on risk appetite as President Trump and his Chinese counterpart, Xi Jinping are expected to sign the preliminary US-China trade deal at the Asia-Pacific Economic Cooperation meeting next month.
Pound Australian Dollar Outlook: Will General Election Worries Weigh on GBP?
Looking ahead to Friday, the Pound could be left under pressure against the Australian Dollar as investors await the EU’s decision on a Brexit delay.
If the European Union grants the UK an extension, but it is to January it is likely to cause a fresh upswing of Brexit uncertainty as Boris Johnson is likely to push forward with a general election.
Meanwhile, any developments in US-China trade relations will likely cause movement of the risk-sensitive Australian Dollar. Any positive developments will likely cause the Pound Australian Dollar (GBP/AUD) exchange rate to slide.
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TAGS: Pound Australian Dollar Forecasts