A strong trade balance overnight strengthened AUD against Sterling, GBPAUD exchange rates are likely to struggle to find the 1.80 range in the weeks ahead.
GBP/AUD rates dropped overnight following Australia’s latest trade balance figures, which showed a tightening of their traded deficit. These figures are followed closely by investors, due to the Australian economies heavy reliance on their export industry and as a result the AUD gained value against GBP overnight. GBP/AUD rates have dropped back towards 1.73 on the exchange, having tested 1.75 earlier this week.
It’s been a mixed bag for Australian economic data this week, with yesterday’s Gross Domestic Product (GDP) figures showing an improvement YoY but came out under expectation for the quarter at 0.5%.
The RBA’s recent minutes also sent mixed messages, although the overall tone was fairly bullish. They remain open to further interest rate cuts if necessary but having cut rates to 1.5% recently, another cut in the short-term looks unlikely. Their five-year growth forecasts have increased and as such I feel the AUD will find a lot of projection under 1.80.
The AUD has performed well against its Sterling counterpart of late and despite an upturn in UK data, I do not feel Sterling will make a sustainable impact under current market conditions. Of course, things can change quickly and with the cloak and dagger type data that is released from China, Australia’s largest trade partners, I would be looking to take advantage of the near three year highs on the pair for those clients looking to sell their AUD positions.
GBPAUD exchange rates still remain above their post-Brexit levels. Speak to our team if you have an upcoming currency exchange to action on 01494 725 353.
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