The GBPAUD exchange rate has been trading in the higher 1.70’s since June as Brexit concerns continue to weigh on the Pound and the prospect of a future interest rate rise in Australia helps the Australian Dollar to maintain some form.
Clients looking to buy Australian Dollars with Pounds could now find a slightly flatter period as investors keenly await the latest news on Brexit and key developments which might move the market.
My belief is that we could easily see the Pound find some snap improvements in the absence of any fresh news on Brexit which will help Sterling to rise. The prospect of the Bank of England raising interest rates would also be a major boost to the Pound, this news is due next Thursday from the UK.
Westpac are currently pricing in a 50/50 chance of an Australian interest rate hike by the end of the year. This Friday sees the latest release of Australian Inflation data which will lead to further evidence on the likelihood of this developing further in the future.
Clients looking to buy or sell Australian Dollars for Pounds have some key events globally to consider too with the latest news on Trade Wars and the Chinese economy also moving the currency markets and the Australian Dollar.
I think it is unlikely that the GBPAUD exchange rate will hit 1.80 although we will more than likely come close once again to the level as we have so many times recently. This would be more than likely triggered by the continuing uncertainty on Brexit since the market is going to continue to struggle to back Sterling, until we get that final clarity over just what Brexit means.
The prospect of a UK interest rate hike is something which might well help the pound to rise but it might end up being a ‘dovish rise’ which ultimately, will see the pound lower. The UK might not even end up raising at all – the market was left disappointed last time, so relying on this event could also end up leaving Australian buyers with Pounds remaining in the 1.70’s.
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