The pound has had a more fruitful time of late against a basket of the major currencies, including the EUR, USD & AUD.
Sterling has seen its value increase against all three currencies seeing an increase from 1.078 to 1.108 on the interbank exchange over the past two weeks taking the markets by surprise somewhat. Whilst its improvement against the USD was less aggressive the pound has at least managed to claw back a level of support, which may be helping support its value around 1.23 once again.
Whilst these rates will not be seen in a favourable light when we consider the historical value of the pair, a number of respected news outlets including the Guardian business and FX Street predicted the pair could fall towards 1.15, ahead of a prospective no-deal Brexit. This was also a “modest prediction” with a view that 1.10 could even be tested if the UK do in fact leave the UK without a deal, come the revised deadline of October 31st.
The AUD has come under considerable pressure of late and we look at some of the reasons behind this in more detail later in this report, but the pound has seen its value spike sharply recently, with GBP/AUD rates now trading back above the 1.81 mark.
There are varying opinions as to why the pound has suddenly found an element of support, in the midst of what felt like an ongoing downward trend.
Their certainly seems to be a correlation between comments made by German Chancellor Angela Merkel and subsequently French President Emanuel Macron, which seemed to indicate a softening by the EU over their previous stance in regards to the Brexit deal that could ultimately be achieved for the UK.
It would seem that both leaders would favour a deal over the alternative, a view also shared by UK Prime Minister Boris Johnson. However, this good will from both sides has been of the key undertones since Brexit negotiations began over three years ago, but as of yet, has failed to transcend into a tangible agreement.
Whether the latest positive comments are the start of something more only time will tell, but perhaps we should remind ourselves that this is certainly not the first time a deal has seemed to be more forthcoming, only to see any growing hopes dashed by a counter report from either Brussels or number 10.
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