Sterling’s positive trend against the AUD continued today, with the Pound now trading around 1.79.
The catalyst for this upturn was comments made yesterday, by the EU’s chief negotiator Michel Barnier.
Barnier indicated that he was close to offering the UK a post Brexit deal, which would be unique and unlike any other partnership the EU currently has with another country.
These comments immediately caused a spike in support for GBP, with investors’ risk appetite being driven in the hope of a positive outcome to the on-going Brexit saga.
The current rates offer those clients holding Sterling some of the best levels they have seen over the past three months, bringing some welcome respite after weeks of seeing their currency positons deteriorate.
Whilst there is certainly some renewed hope that a deal can now be reached, clients hoping for further gains should heed an element of caution. Firstly this is not the first time a positive outcome has been touted, only for hopes to be dashed by further political wrangling. It should also be noted that Barnier gave an interview this morning on German radio, where he indicated that all outcomes were still on the table.
This is hardly a set in stone guarantee that a deal will be reached and as such, I would be very tempted to take advantage of the current spike if I were looking to buy AUD and remove any unnecessary market risk.
Looking at the Australian Dollar, it has faced its own set of problems of late. Ever since President Trump introduced his tariffs on Chinese imports to the US, commodity-based currencies such as the AUD have found life tough going.
A slowdown in global trade has put pressure on their export driven economy, which relies heavily on China’s demand for its raw materials. Therefore, the slowdown in Chinese Industrial Production has caused investors to shy away from the AUD of late, thus causing its value to fall.
To discuss how political factors in the UK and economic factors in Australia are likely to continue impacting GBPAUD excange rates, feel free to get in touch using email@example.com.