- Pound (GBP) advances despite EU threatening legal action following PM’s plan to undercut the divorce bill
- Emergency talks will take place alongside Brexit trade deal talks
- Australian Dollar (AUD) declines as covid restriction are extended
- Consumer inflation expectations deteriorate
The Pound Australian Dollar (GB/AUD) exchange rate is pushing higher on Thursday, snapping a 4-day losing streak. The pair settled on Wednesday -0.8% at 1.7847, marginally up from 1.7813 the 7-week low struck earlier in the session. At 08:30 UTC, GBP/AUD trades +0.3% at 1.7900.
The Pound is managing to gain ground despite the EU considering legal action against Britain. The two sides will hold emergency talks today following Prime Minister Boris Johnson’s internal markets bill plan, which looks to undermine areas of the Brexit divorce bill. Brussels have said that they could look to take legal action if the British government does not offer sufficient reassurance in today’s talks.
European Commission Vice President Maros Sefcovic is due to meet with Michael Gove, his UK counterpart at 12:00 GMT today. These talks will happen alongside Brexit trade deal talks. The fact that the trade deal talks are still going ahead is offering some relief to Pound investors.
With no economic data on the calendar today, the only focus for Pound investors will be Brexit and Brexit headlines.
The Aussie Dollar is declining on Thursday as coronavirus lockdown restrictions in Melbourne, Australia’s second largest city were extended. This could hamper Australia’s economic recovery and is therefore dragging on demand for the currency. The proposed road map out of lock would see Melbourne only completely emerge from lockdowm in late November, if no new infections are recorded fOr the two weeks leading up to that date.
The economic impact of such as extended lockdown could be severe, particularly given that the state of Victoria accounts for around 25% of the national economy.
Data showing worsening inflation expectations has added to the selling bias. Australia’s consumer inflation expectation slipped to 3.1% in September, down from 3.3% in August.