The Aussie Dollar finds ground in a Pound sell-off due to last weeks shock Brexit vote. Whether this will impact the RBA's decision to cut rates further is unknown

We also saw huge gains for the Australian Dollar against Sterling after a big sell off for the Pound in light of the referendum decision. It was only recently that Sterling was trading at over 2 against the AUD and this has created some excellent opportunities to buy Sterling. However, I am personally not expecting these gains to continue as much as some others.

Last week the Reserve Bank of Australia confirmed in its minutes that it would not be looking at another interest rate cut in the near future and the most recent rate cut was unpopular with some of the members. However, the Brexit could in fact cause a rate cut in Australia as it could result in a global economic slowdown as the commodity based currencies are often the most exposed to global economic uncertainty.

Political worries for the Australian Dollar

Although I expect the Australian Dollar to continue to make gains against the Pound I think we could see the gains limited in terms of length of time. My reasoning is that things will inevitably start to settle as negotiations between the UK and Europe begin.

The Australian Federal Election is due to take place on 2nd July and generally speaking when the votes are expected to be close this often weakens the currency involved. We could even see a hung parliament and when that happened for the UK previously it caused losses for Sterling so I would expect the same to happen to the AUD if we see a hung parliament in the next fortnight.

If you do not have the full amount of funds at the moment but would like to take advantage of these current spikes then speak with your account manager who can explain the benefits of buying a forward contract. This allows you to secure an exchange rate for the future without having the full amount you wish to transfer.

Do you have a need for Australian Dollars? The Brexit vote may have worked in your favour. Call our trading floor on 01494 725 353 or email me here and I will be happy to assist you.


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