GBP/AUD rates have fallen back below 1.85, following a tough couple of days for the pound.
GBP positons were sold off in haste, following Brexit developments on Wednesday, which has inadvertently boosted the AUD’s value.
Just as it seemed as though talks between the UK & EUR were progressing more positively, the markets were once again thrown into chaos.
UK Prime Minister Theresa May confirmed that she had requested an extension to Article 50, which had subsequently been provisionally approved by the EU.
Extension passed by the EU 27
President of the European Council Donald Tusk confirmed that the EU would approve an extension until May 22nd, on the condition that the UK MP’s vote in favour of the current Brexit deal. With a third and possible final “meaningful” vote likely to take place next week, all eyes will be on UK Parliament and whether or not Theresa May can finally persuade her fellow MP’s to vote in favour of the deal.
With the previous deadline of March 30th fast approaching, the EU have already confirmed that there will be an extension to April 12th, if the Brexit deal does not get approved.
Many reports are indicating that it is unlikely that the PM will get the required support in parliament, which makes the PM’s speech from earlier in the week, in which she criticised her fellow MP’s, even more surprising.
GBP has historically found plenty of support against the AUD around and above 1.80 but with the prospect of a no-deal Brexit growing once again, could this key threshold be broken?
Whilst this would require a further sell-off of GBP positons, it does seem that a major bounce back for the Pound will be reliant on some progress with Brexit talks.
The outlook currently is looking fairly bleak, let’s hope that the weekend brings with it some positive reaction and breakthrough in the current stand-off.
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