Could there be a mass exodus from investors from Australian Dollar?

Sterling has suffered against the Australian Dollar of late due to very positive data from down under coupled with the uncertainty surrounding Brexit. In fact, Australia has recently overtaken the Netherlands for having the longest succession of economic growth without recession. This Wednesday could give some respite for the pound and provide an opportunity for Australian Dollar buyers.

On Wednesday, we will see if the Federal Reserve interest rate decision in the US. It is widely anticipated there will be a rate hike. The odds of a rate hike currently sit at 80%.

If the hike does go ahead, high risk currencies such as the Australian Dollar will become far less attractive. The US Dollar is considered a safe haven, and with higher returns, we could see investors flood to the US Dollar. This could cause significant Australian Dollar weakness.

Unemployment and Consumer Inflation Expectation could cause movement on GBP/AUD

Thursday will bring the release of consumer inflation expectation and unemployment. Consumer inflation expectation presents the consumer expectations of future inflation during the next twelve months. This can influence the Reserve Bank of Australia on monetary policy so can cause movement in Australian Dollar value.

Unemployment data is a key barometer as to the stability of an economy. If data is some way from expectations then this could cause movement on the exchange.

I think although there is potential for falls in Sterling value short to medium term due to the uncertainty surrounding Brexit. I think the pound is one of the most undervalued currencies in the world and as trade deals become more apparent I expect the pound to rally.

Australian Dollar sellers should consider taking advantage of current levels.

For more information on how future data releases could affect the Australian Dollar please feel free to email me at dcj@currencies.co.uk.

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