When planning a GBPAUD exchange at present, my advice would be to expect the unexpected as there are many factors impacting the currency pair. Since the middle of the summer, the Pound has lost 10 cents against the Australian Dollar, however at times Australian Dollar buyers have been presented with spikes in the market to take advantage of.
Regular readers will be aware that Brexit uncertainties have caused investors to hold off investing in the UK or even sell off their Pounds and move assets elsewhere due to the uncertainty. It was only 2 weeks ago that Trade Secretary Liam Fox told The Times that he thought there was a 60% chance of a no deal Brexit.
However it’s not all good news for clients that are selling Australian Dollars to buy Pounds, as Australia has problems of its own. Globally, Central Banks are hiking interest rates and Australia are being left behind. Furthermore the uncertainty of ‘trade wars’ is a concern for investors which is another reason why GBPAUD has spiked throughout the summer.
Looking ahead, the US is due to levy 25% of tariffs on China this week which will equate to $16bn. This isn’t a shock to the market, therefore I don’t see this event having a major impact on GBPAUD exchange rates. However this story has the potential to impact GBPAUD if further tariffs are imposed.
Also this week, US Federal Reserve Chairman Jerome Powell is set to deliver his speech at the Jackson Hole Symposium on Friday. As the US economy is extremely robust at the moment, I expect his commentary will be positive and therefore commodity currencies may suffer, as further sell offs take place and US Dollars are purchased. A potential spike in the market for Australian Dollar buyers.
However, earlier in the week on Tuesday, the UK’s Brexit Secretary Dominic Rabb and the EU’s chief negotiator Michel Barnier will resume Brexit negotiations. As we have seen over the last 18 months, any news that breaks after the meeting has the potential to have a major influence on Sterling.
For more information on the potential impact of Brexit negotiations resuming, feel free to get in touch with me directly using [email protected].