GBP has had a relatively subdued couple of days, with a continued lack of clarity over the UK’s final Brexit position seemingly hampering any further advancement for the pound.
With the markets posied for the next major twist in the on-going Brexit saga, both GBP/EUR & GBP/USD rates remained static over the weekend. GBP failed to advance beyond 1.16 against the EUR on the interbank, whilst the pound’s recent run at 1.30 against the USD has cooled, with the Dollar finding plenty of support in the 1.28’.
This lack of activity was evident despite a report in the Guardian that a leaked document had suggested that the EU has agreed to sign off on a Brexit extension, which would see the current deadline of October 31st moved back until January 31st, 2020.
Despite scepticism from various EU members, notably the French government, who felt another extension was unlikely to facilitate a significant step forward, it would seem as though the EU are prepared to give the UK government more time to sign off on the current Brexit deal.
It is also interesting to note that the EU are seemingly prepared to include an option, which would allow the UK to leave early if a deal is finally ratified. Whilst the EU’s rhetoric suggests that they are still hoping for a deal to be reached, the UK government seems no closer to accepting the current terms, which has forced UK PM Boris Johnson to seek an early general election to try and help push through his deal.
However, with Labour unlikely to agree to an early election until a no-deal Brexit is completely removed as a prospective outcome, number 10 has said they will look at “other options” should its plans for a December 12th election fail.
With the 27 EU member countries set to meet today to ratify any offer of an extension, we could be set for another week of uncertainty and potential market volatility as the UK government seek to finally make a significant breakthrough in the current stalemate.
President Trump has attempted to shift the publics focus away from his on-going impeachment enquiry and a dip in public support, following a US raid in North-West Syria over the weekend.
Whilst the president remains steadfast in his leadership approach, he has come under fire from Democrats and even members of his own Republican party in recent weeks, following his controversial decision to remove US troops from the Turkish/Syrian border.
He has also had to counter claims of unethical dealings with the Ukraine over a foreign aid payment, which was apparently withheld until certain conditions had been met, a scenario which has drawn unwanted media attention to the White House at a time when the President is gearing up for next year’s elections.
Whilst Trump is still the favourite to win next years Presidential race, further scrutiny over his prospective misdemeanours is likely over the coming months, although for the time being the USD seems to be avoiding any major downturn as a result.
Despite a dip in value against the GBP of late, the dollar continues to trade close to a 12-month high against the EUR, a position which is being upheld despite the on-going global trade dispute between the US & China.
The IMF has sharply downgraded its growth forecasts for the Australian economy for the remainder of 2019 and 2020.
This move has come due to growing concerns that the Australian hosing market is showing signs of severe strain, with the IMF’s forecasts suggest that the Australian economy is now underperforming that of Greece’s which has gone through several years of economic depression.
GBP/AUD rates continue to trade below 1.90 but with Australia’s current growth forecast now cut from 2.8% in 2019 to 1.7%, investors risk appetite for the AUD could weaken dramatically as we head into the last quarter of the year.
The current economic outlook has also been influenced by the IMF’s global forecast, which has also shrunk to 3%, its worst performance since the global financial crisis of 2008-09.
With the Australian economy heavily reliant on global growth, it may come as little surprise to investors, who have steadily sold-off the AUD for much of the year, causing it to weaken not only against the pound, but against the majority of its major currency counterparts,
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