In today’s GBP/AUD forecast we discuss the events that are likely to impact exchange rates this week. GBP/AUD rates are currently trading around 1.77, with the Pound still struggling to make any sustained move above 1.80.
This inability to break through what has become a key threshold for the GBP/AUD rate, despite the UK and EU finally agreeing a Brexit deal, may be of concern to those clients looking to execute a GBP/AUD transfer over the coming weeks.
Parliamentary approval of Brexit is far from a certainty
The Pound had been under pressure again up until the weekend, when the UK and EU finally found some common ground. Despite an agreement between the two, the final agreement must still be ratified by Parliament. The noises emanating from Westminster indicate this is certainly not a forgone conclusion and potentially one of the reasons that GBP has not made further inroads against the AUD this week.
If UK Prime Minster Theresa May fails to convince her fellow MPs to vote in favour of the current proposal, it looks very likely that a no-deal Brexit will be the ultimate outcome. This would, in my opinion, also make her position as PM untenable, which is adding another level of uncertainty to proceedings.
How these various outcomes will affect GBP value is yet to be fully understood but a no-deal scenario is likely to put some significant pressure on GBP in my opinion.
Looking at the AUD and this has also struggled to gain much support of late. The now well documented trade standoff between the US and China has put the Australian economy under pressure, due to the strong trade relationship between Australia and China. With China’s demand for Australia’s raw materials softening, investors have been shying away from the riskier AUD and moving their funds back into safer haven currencies such as the USD or CHF.
Looking ahead and unless the talks between US President Donald Trump and his Chinese counterpart Xi Jinping help cool the current trade war between the two nations, the AUD could remain significantly handicapped for the foreseeable future.
With commodity-based currencies such as the AUD relying heavily on global growth to prosper, investors will be looking for the global markets to improve, before making a return. Any spike in global trade could help support a rise for the AUD and this in itself could help drive its value against the Pound, especially if the UK Government fail to rubber stamp the UK’s final withdrawal agreement with the EU.
To discuss the factors and events that could affect GBP/AUD exchange rates please use the form below to get in touch. I’ll be happy to respond personally and discuss your queries.