Following the UK Referendum and the decision of the UK to leave the EU, this report looks at what could be in store for the Australian Dollar.
The Australian Dollar like all currencies against Sterling has seen major gains this morning as the news reverberates around the Globe. The GBP/AUD rate has moved down to the low 1.80’s which is the second time this year the rate has reached this level. The rate which looked likely to move above 2.00 in the coming months has fallen back nearly 15 cents. The rate has rebounded from the day low of 1.799 but over the next few days there is every possibility of returning to that level.
The Australian Dollar in the medium term could now come under pressure from the Reserve Bank of Australia. The recent strength for the AUD caused the RBA to cut interest rates earlier this year and the major jump in strength against Sterling could now cause a second cut this year.
Chinese markets are one of the major influencers on the Aussie and the fallout of the Brexit could have an effect on global markets. The FTSE is expected to be the victim of a major sell-off with plenty of evidence suggesting the Asian markets have already started the process. If the FTSE does lose the 20% predicted by UBS then there is likely to be a fall-out on further markets. If the Chinese market starts to fall this could have an effect on the AUD through the second half of the year.
With so much attention on the UK it is easy to forget the Australian election scheduled on the 2nd July. The vote there is also very close with Labor now at 51% versus the Liberal Coalition at 49% making it very difficult to call which should see the Australian dollar remain weak up to the vote.
If you’re looking to either buy or sell AUD then you should consider getting in contact with your broker. The brokerage is able to be most effective in this volatile market if we are totally aware of the requirements you have.
If you would like to discuss anything in this report or the impact of the UKs decision to leave the Eu on exchange rates please email me directly at email@example.com or call 0044 1494 725353.
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