Sterling has made some gains against the Aussie Dollar this week, following the news of a Brexit transitional deal. This report discusses how AUD could be impacted by further developments in Europe and the US in the coming weeks. The table below shows the difference in Australian Dollars you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPAUD3.8%$13,400 AUD

GBP gains on AUD following Brexit transition deal

Since the announcement of the post-Brexit, transitional deal at the beginning of this week, the Pound has gained against most of its major counterparts, particularly the AUD. The Pound is in fact now trading against the Aussie at the best levels since the EU referendum and in the past week has gained by as much as 3% in value. To put that in to monetary terms a £200,000 transfer would now gain an extra $11,400.

As well as the value of the Pound increasing, the AUD is also showing signs of weakness after the minutes from their latest monetary policy meeting, where they kept rates at their all-time low of 1.5%. The minutes also suggested that the chances of a rate hike in the near future are slim and that there will be a 'gradual return' to normal levels of between 2-3%.  This is in stark contrast the US economy, where interest rates are expected to be raised by the Federal Reserve this evening, with another three hikes expected throughout the rest of this year.

Sterling gains on Aussie Dollar following Brexit transition deal

Australian Dollar falls as US Fed gear up for interest rate hike

This could spell bad news in the future for the value of the AUD. One of the reasons it has performed well in recent years is due to the higher returns that have been offered when compared to other developed nation currencies such as the UK and US where interest rates have offered limited returns.

Now that the Fed are expected to aggressively raise rates this year, coupled with the fact that the USD is seen as a safe haven currency, it is highly likely that investors will opt to hold their deposits in Dollars rather than AUD. As such, this could see the value of the Aussie fall further over the course of this year.

Any clients with an upcoming GBP/AUD requirement would be wise to keep an eye on unemployment figures from Australia in the early hours of tomorrow morning. These figures are likely to be closely monitored when the Reserve Bank of Australia determine their monetary policy decisions and therefore we could see volatility on the Aussie after the release. As this data will be released outside of our trading hours, stay in contact with your account manager today to find out how this could affect your upcoming currency needs.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.