GBP/AUD trades precariously above its yearly low

Sterling weakness along with strong demand for high yielding major currencies such as the Australian Dollar has left AUD sellers in a strong position for repatriating funds.

The Aussie is up over 16% on Sterling compared with this time last year. To put that in monetary terms that’s an additional £32,000 on a 200,000 AUD repatriation.

As the GBP/AUD pair trade precariously just above their yearly low at 1.69, Sterling sellers will hope the pair can climb back above the psychological level of 1.70. Last week the Aussie gained momentum on the Pound after the BoE’s Minouche Shafik suggested further policy easing will be needed. Whilst the sell-off was subdued somewhat as a World Trade Order (WTO) report suggested that there won’t be a UK recession in 2017 despite the UK electorates Brexit vote, the Aussie Dollar still ended the week on top as the familiar Friday sell-off of the Pound took place as predicted earlier in the week by my colleague, Joshua Privett.

Could the Aussie reverse its gains?

I think that much of how the Aussie will likely perform this year will depend on the election outcome in the United States, and the expected outcome in the lead up to the election.

Due to the hopes of Clinton victory within the financial world, generally speaking, I should think the Aussie could come under pressure should Hillary Clinton win or look likely to win. My reasoning behind this is that there’s more chance of an interest rate hike in the US if she wins in my opinion, and an interest rate hike in the US will likely weaken the Aussie Dollar as investors move funds from the Aussie (amongst other currencies) into the US Dollar.

In the early hours of Tuesday morning the Reserve Bank of Australia will announce their most recent Interest Rate decision. Expectations are for no change and for rates to remain at 1.5%. Any deviations from this could create large swings within exchange rates so get in contact today if you wish to discuss an upcoming currency requirement at the current levels.

Call our team of brokers on 01494 725 353 if you have an AUD buying or selling requirement. A number of key events have the potential to impact GBPAUD, keeping in touch with our brokers could save you from potential losses.


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