The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
With the two sides showing no real signs of progress towards a deal, in spite of the limited time remaining, fears of a hard Brexit scenario picked up once again.
GBP exchange rates began to come under pressure at the end of last week as comments from Bank of England (BoE) policymaker Michael Saunders highlighted the potential for further monetary stimulus.
This cast doubt over the relative health of the UK economy alongside the latest UK service sector PMI survey which, despite showing growth, came in lower than expected and highlighted the growing pace of job cuts.
The appeal of the pound could easily weaken on the back of the latest raft of UK production and growth data.
Further deterioration in July’s manufacturing and industrial production figures may leave the pound vulnerable to additional selling pressure as worries over the economic outlook mount.
Unless August’s NIESR monthly gross domestic product tracker betters forecasts, showing a smaller slowdown than anticipated, GBP exchange rates look set to remain biased to the downside this week.
However, the main driver for pound exchange rates this week will depend on how the latest round of UK-EU Brexit trade talks progress.
After reports emerged today that the UK government is drawing up legislation to override part of the withdrawal agreement, and Boris Johnson intends to end talks by mid-October, the pound’s losses are likely to continue.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)