Eventful day for GBP/AUD pair results in almost a 2-cent move in 1-day!

Pound to Australian Dollar forecast Sterling still struggles against the Australian Dollar despite many predicting AUD weakness

The Pound to Aussie Dollar hit its highest level in around 5-months in the early hours of this morning’s trading session, as the pair touched 1.84 earlier.

Since the Brexit vote, the highest the level has reached has been 1.85 so today’s market movement is significant, and has been bought on mostly from AUD weakness as opposed to Sterling strength, as many of our regular readers will be aware. Sterling is under pressure at the moment, and mostly driven by Brexit related news rather than economic data. This is because the UK is set leave the EU soon and there is still to be a deal arranged by the UK and EU leaders. An issue the UK has is there is a lot of infighting going on at the moment, not just between leavers and remainers but between the type of departure the UK will make and the type of rules the UK will continue to abide by, or not.

The Reserve Bank of Australia was more bullish than expected in its minutes from the 4th of September meeting. This pushed the Aussie Dollar whilst the fears surrounding the trade war between the US and China pushed the Aussie Dollar lower. It emerged that overnight US President Donald Trump has implemented a new bout of tariffs in the region of $200bn which is the biggest so far. With Australia having an export driven economy and its close proximity to China, talk of a trade war is likely to result in further AUD weakness.

Another potential downside for the Aussie Dollar will revolve around the plans of the Reserve Bank of Australia, and whether they will continue to hold out raising interest rates or even decide to cut them. The overheating property market is another concern that ties into this matter, and with AUD losing its status as one of the highest yielding currencies recently this issue to likely to continue to drag on the Aussie Dollar’s value.

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