We’re now just 4 days away from what’s still the official Brexit date, although the significance of the 29th of March is likely to wane throughout the week as we should get a clearer picture of the UK’s next steps.
Last week during an EU summit in Brussels all 27 member states granted the UK an unconditional extension to Article 50, running up to the 12th of April. There will be another vote on Theresa May’s Brexit deal before then according to reports, with some suggesting that it could come as soon as the next few days. If Parliament were to approve the deal there will be another extension up until the 22nd of May.
Brexit will continue to drive GBP/AUD rates
Over the past month or so the Pound has gained in value against all major currency pairs as the no-deal Brexit has become increasingly unlikely, especially now that MPs have voted against the proposals. I don’t believe that the volatility for the Pound is over yet. This week could offer us further direction for the currency, especially as economic data is thin so Brexit updates will continue to dominate financial headlines.
Australian Dollar forecast
From the Australian Dollar side, there are renewed concerns surrounding a global slowdown especially that the further interest rate hikes have been ruled out for the remainder of the year. Global equity markets have begun the week in the same fashion they finished last week with market sell-offs taking their toll. The Swiss Franc and the Japanese Yen have both benefited from the sell-off, which is a good indicator for market sentiment as they’re both considered safe haven currencies.
An improvement to Australia’s unemployment figures last week offered a boost to AUD exchange rates but the slowdown in the global outlook is likely to remain a downside for AUD exchange rates moving forward.
On Friday morning there will be UK Gross Domestic Product (GDP) figures released at 9.30am which is worth being aware of, and later today outside of market hours a member of the Reserve Bank of Australia will be speaking which could impact AUD rates depending on the content of the speech.
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