Will the Brexit extension be confirmed this week, and how could this impact GBP/AUD?

Will the Brexit extension be confirmed this week, and how could this impact GBP/AUD?

The third meaningful vote on UK Prime Minister, Theresa May’s Brexit deal now looks less likely to take place after rumours had suggested that it will take place before tomorrow.

May’s EU Withdrawal Agreement has already been rejected by MPs twice, and yesterday the House of Commons speaker, John Bercow announced that for the vote to take place once again there needs to be significant changes to the deal in order for him to allow another vote.

How could an extension to Article 50 affect exchange rates?

Whether there is a another vote or not, the chances are now that there will be an extension to Article 50, although this is yet to be confirmed. There are mixed opinions within the financial markets as to how this could impact the markets. There will be an EU Summit on Thursday and many expect Theresa May to request the extension from the 27 EU leaders. With some sources suggested an extension of 9-12 months, which is a change from previous expectations of 3 months.

An extension could add to the uncertainty for the UK economy moving forward, and this could soften the Pound against other currencies, such as the Pound to Australian Dollar rate.

Thursday could be busy for the Pound as not only will the EU Summit take place but also the Bank of England’s interest rate decision, along with the minutes afterwards. No changes are expected to interest rates but any forward guidance on potential changes could impact GBP/AUD exchange rates.

Australian economic data due this week

The Australian Dollar could also see some volatility on Thursday as in the early hours there will be unemployment data released with expectations of 5% expected. The Australian Dollar has been coming under pressure through 2019 so far as there are expectations for further interest rate cuts if the economy continues to stall. If you would like to plan around Thursday’s release do feel free to get in touch prior to then as the GBP/AUD rate could be impacted for a number of reasons as touched on above.

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