GBP/AUD – The Pound has struggled of late due to the lack of clarity surrounding Brexit. While a “no deal” scenario is still a possibility the pound stands little chance of making significant gains. UK trade secretary, Liam Fox recently said he thinks there is a 60% of a “no deal” situation and Reuters have it at a more modest but still worrying 25%.
We did see Sterling make gains against the Australian Dollar yesterday following news that both Germany and UK has slightly changed there stance in Brexit talks.
German Chancellor, Angela Merkel has stated she would be willing to consider a “less detailed” proposal for the future trade deal between the EU and the UK post Brexit. This could potentially ease a path for a deal to be finalised before the new expected deadline in November.
GBP/AUD currently sits just above 1.80, but I am of the opinion it will retract and 1.80 will act as a resistance point.
The Australian economy does have it’s own worries however due to the cost of housing in high wage areas and also the ongoing trade war between China and the US. Australia is heavily reliant on China buying its exports. Investors are losing confidence in the Aussie due to the potential escalation in the trade war with more tariffs expected.
If the Chinese economy begins to slow this could hit the Australian economy and in turn the Australian Dollar. Over the weekend, Chinese import and export data is released which is likely to have an impact on the Aussie Dollar.
I feel the uncertainty surrounding Brexit is currently outweighing Australia’s problems and I would be taking advantage of current levels if I was purchasing AUD short term. For more information on how Brexit developments and Chinese economic data released over the weekend could impact on the Aussie feel free to get in touch using firstname.lastname@example.org, I’ll be happy to get back in touch and discuss your requirements.