Sterling has suffered of late due to the current situation on Brexit and UK politics. Brexit being one of the key drivers on GBP/AUD.
|Currency Pair||% Change (Month)||Difference on £200,000|
We recently witnessed a spike up to 1.88 following what was deemed to be positive news on Brexit. May’s talks with Corbyn over a deal that could be mutually acceptable from both Labour and the Conservatives caused the Spike. I believed the gains for sterling would be short lived as I had little faith the talks between May and Corbyn would result in a deal that would pass through the House of Commons. This proved to be true.
Following May’s resignation the pound has fallen in value with GBP/AUD now sitting in the 1.82s. I am of the belief that until we have a confirmed a new UK Prime Minister and had some clarity around Brexit, the pound is destined to remain fragile.
The Aussie has had its own trouble; Australia has a heavy reliance on China purchasing it’s goods and services and any decline in Chinese growth is likely to impact the Australian economy and in turn the Australian dollar. The escalation in the US/China trade war is causing investors to move away from riskier commodity based currencies such as the Australian dollar for safe haven investments.
There is also the chance of an interest rate cut from the Reserve Bank of Australia (RBA) next month, so despite the potential for further AUD gains it may be wise to move before the decision if you are selling the Aussie.
There is little data of consequence from Australia this week. Building permits and Private Capital Expenditure is due out during the early hours, but I would not think these releases will cause enough movement on the market to warrant staying up all night for the release. Brexit and UK politics will continue to be the key drover on GBP/AUD.
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