It appears that the RBA is not going to raise interest rates any time soon. Whilst the Australian dollar is marginally stronger this week following a slightly more positive commentary from the RBA, who highlighted that the weaker currency is actually helping the economy, some major challenges remain for AUD.
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Overnight Australian Unemployment data has been released which has not had any major impact on the rates. Expectations were for slightly worse figures, which is what we have seen, this all goes to highlight why the Aussie dollar might remain weaker ahead.
Global events such as the Trade Wars are problematic for the RBA, which to me makes it seem unlikely that they will be raising interest rates anytime soon, thereby keeping the Australian dollar weaker.
GBPAUD levels are close to the best that we have had since the Brexit vote. On a £250,000 transfer into Australian dollars, clients have been getting an extra $70,000 AUD at the best rates in the last week. This is an excellent opportunity that could easily be disrupted by the latest Brexit news. The EU Summit continues for the rest of the week, where Brexit is high on the agenda; sterling rates could very easily be in for a turbulent period as a result.
It appears they will struggle to do a deal this week, the momentum of sterling seems to have been drifting going into today so it will take some positive news to switch up the sentiment.
The market is without doubt poised for all eventualities; there are still numerous outcomes from Brexit which could see the pound rising higher or lower depending on the changes in mood.
Assuming there is a belief of a deal being reached this week or in the weeks ahead, sterling to AUD rates should rise, we could well go up as high as the 1.86-1.87 level. Any lack of news or continued stalemate in negotiations should see sterling tread water or fall, and a complete breakdown in talks would likely see the pound retest the lower 1.80’s.
Guessing the next twists on this pair would involve partly trying to second-guess Donald Trump’s actions and the outcome on Brexit, no easy feat. If you have a GBPAUD transfer to make and wish to be kept up to date with the latest news and events, please feel free to get in touch with us.
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