Despite uncertainty surrounding the UK’s future at present as calls grow for Prime Minister Theresa May to resign after a day of defeats in the European elections yesterday (read our GBP section for full coverage) in what has been a torrid week for the British Prime Minister.

Currency Pair		% Change (Week)	Difference on £200,000
GBP	AUD	1.31%	AUD $4,840

Reserve Bank of Australia Outlook Confidence

Despite this, the Australian dollar has not been performing well of late as investors avoid riskier currencies because of the on-going trade war with China which is expected to cause a lag in global economic performance.

Earlier this week, Reserve Bank of Australia (RBA) governor Philip Lowe hinted that policymakers may cut interest rates in June’s meeting to a record low of 1.25%, highlighting the current strain on the Australian Economy.

Although the current political situation in the UK is keeping the pound under pressure, analysts are expecting GBP/AUD to gain in the longer term, with only one rate hike priced in at present and many experts expecting the RBA to cut rates to 1.00% before the year ends.

As we end the week, the Australian dollar could remain under pressure, although we could see a window of opportunity for AUD sellers if Theresa May resigns. Most pundits are expecting a resignation either today or over the weekend, so get in touch to set up a stop loss or limit order to avoid substantial losses.

Housing market data next week

Next week’s new home sales data will be keenly watched by investors and is the only significant data release next week for the AUD. The housing market in Australia has been cooling for some time now, however lower prices and lower interest rates cuts could turn this around in the later part of 2019 and boost the Australian economy.

News

The key reason for Sterling’s current vulnerability however is Brexit. If there is one thing investors do not react well to it is uncertainty and at present it is extremely difficult to call whether or not a deal is going to come to fruition.

22nd December 2020

Sterling Remains Fragile With a Brexit Deal Hanging in the Balance

Sterling is in an extremely fragile position following Boris Johnson’s announcement on Saturday that many areas of the UK would be placed into Tier 4 lock down.

By Daniel Johnson