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GBP/AUD Exchange Rate Slumps as Brexit Talks Stall

Last week’s high: AU$1.8396

Last week’s low: AU$1.7957

Brexit Impasse Weighs Heavily on GBP/AUD Exchange Rate

Heading into the weekend the GBP/AUD exchange rate slumped sharply in response to a fresh breakdown in Brexit negotiations.

As EU leaders rejected the Chequers proposals Theresa May announced that talks were now at an impasse, prompting the Pound to plunge lower across the board.

Even though trade tensions between the US and China escalated with the imposition of fresh tariffs this failed to keep the Australian Dollar on a weaker footing, meanwhile.

As the tariffs proved more limited than markets had initially feared this encouraged investors to buy back into the higher-yielding AUD.

A modest uptick in the Westpac leading index for August also offered a boost to AUD exchange rates this week.

AUD Outlook: Global Trade Tensions to Drive Australian Dollar

With fresh Australian data a little thin on the ground this week the Australian Dollar is likely to remain primarily driven by wider market developments.

Any signs that the US and China may restart trade discussions could see AUD exchange rates strengthen.

On the other hand, if the Trump administration doubles down on its protectionist rhetoric market risk appetite is likely to diminish once again.

The GBP/AUD exchange rate could struggle to find much support in the coming days as the threat of a no-deal Brexit continues to weigh on the minds of investors.

As anticipation mounts for the Conservative Party conference the mood towards the Pound is unlikely to see any significant improvement.

Key Events

25th September

00:30   Australia ANZ Roy Morgan Weekly Consumer Confidence Index (Sep 23)

26th September

11:00   UK CBI Reported Retail Sales (Sep)

19:00   Federal Reserve Policy Decision

28th September

02:30   Australia Private Sector Credit (Aug)

09:30   UK Gross Domestic Product (2Q)

 

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To keep up to date with the Australian Dollar, visit the AUD blog in our Currency News section.

 

Alastair Archbold

Currency Dealer

aja@fcgworld.co.uk

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