Sterling lost ground against its AUD counterpart during Wednesday mornings trading, following a positive run in the lead up to triggering of the UK’s Brexit bill. The invoking of Article 50 is now resigned to the pages of history and will no doubt be discussed by economists and investors for decades to come. The initial market reaction was fairly diluted, especially when you consider how much emphasis there’s been around the subject since last June’s unexpected referendum result.
I expect the Pound to find support above 1.60 but any sustained move forward will now likely be dependent on the complex Brexit negotiations the UK government will have to enter into with the EU.
The Pound had made gains, with house prices in Australia and rising inflation causing some concern for the Reserve Bank of Australia (RBA). Sterling broke through 1.65 as the markets reacted well to confirmation that yesterday’s bill was finally going to be pushed through.
It seemed to remove a level of uncertainty that was handicapping any major advances for the Pound but as the events of yesterday crept closer, Sterling came under pressure and the AUD realigned its position towards 1.62.
Any positive developments regarding the UK’s separation and any deals still in place with the EU will probably benefit those clients holding Sterling and inadvertently weaken the AUD as a result.
The AUD has performed well against the Pound for some time but with China’s demand for their huge reserves of iron ore slowing and high labour costs in the mining industry putting pressure on the Australian economy, now could be the time to sell any AUD positions.
Client should look to take advantage of what are extremely attractive levels, especially when you consider the history on the pair and not gamble on what has become an increasingly volatile market. Call us on 01494 725 353 if you’d like to discuss an upcoming Australian Dollar requirement.
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