Weak Aussie continues to gain on Sterling as Brexit pressures continue to weigh on the Pound
The Reserve Bank of Australia (RBA) has the opportunity this week to hike interest rates at their most recent Monetary Policy Meeting.
They opted not to and offered a relatively bearish outlook afterwards also, citing the slowing housing market, household debt being high and also the issues surrounding the US-China trade war as reasons to be cautious.
Many other Central Banks of major economies have begun to hike interest rates, including the Bank of England despite the Brexit now just around the corner. The bearish outlook from the RBA on the other hand resulted in a weakening of the Aussie Dollars value against many pairs but it’s actually been going from strength to strength against the Pound with the AUD to GBP rate gaining by over 2% over just the past 5-trading days.
Whilst the concerns surrounding the US and China trade wars have dented the chances of a rate hike from the RBA, the subject going quiet for the past few weeks has left the Aussie Dollar strengthening as the economy is tied into China’s quite heavily, owing to the fact that China is Australia’s biggest trading partner.
Sterling exchange rates have been dropping across the board of major currency pairs, as the reality of the UK divorcing the EU without a ‘Brexit Deal’ in place is now very much a reality. Over the weekend Trade Secretary Liam Fox’s comments regarding the 60% chance of a ‘No Brexit Deal’ haven’t been met well by the markets, and this appears to have spurred on the sell-off in the Pound’s value.
There has been an interest rate hike from the Bank of England (BoE) this month. Under usual circumstances this would result in a boost to the Pound’s value, especially after the commentary afterwards suggested there could be more in future. This has done little to change the Pound’s fortunes and suggests to me that Brexit is now the main driver of GBP value.
The next major release out of the UK is tomorrows GDP data. The expectation is for a release of 0.1% and I think a drop below this is likely to result in a sell-off of the Pound potentially putting pressure on the 1.70 support level. It did hit 1.72 at its lowest level today.
If you have an upcoming AUD transfer, or would like more information on any of the above please don’t hesitate to email me directly using [email protected] and I will be happy to discuss your requirements.
The post Weak Aussie continues to gain on Sterling as Brexit pressures continue to weigh on the Pound appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2018/08/weak-aussie-continues-to-gain-on-sterling-as-brexit-pressures-continue-to-weigh-on-the-pound/
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