Despite coming under pressure recently, the GBP to AUD exchange rate has gained by 2-cents in two-days moving up from lows of 1.7850 to 1.8050 at the time of writing.
Much of this strength stems from some positive news for the UK which was released yesterday, after it’s emerged that the UK and EU negotiators have agreed on terms that will allow the UK financial services companies to retain access to EU markets after Brexit. This sector is becoming more and more important to Australia as the mining sector dependence eases off, but in the UK it’s arguably the most important area of the economy which is why sterling has gained across the board of major currency pairs.
This positive news for the UK economy came on the same day that Brexit Secretary Dominic Raab suggested that an overall Brexit deal will likely be finalised by the 21st of November. Sterling spiked on this news as well, although hopes have been calmed as Raab subsequently said there are no confirmed dates for further talks.
The Aussie dollar has remained resilient in the face of concerns recently, as the Chinese economy is showing signs of slowing in many different areas as well as overall. With China being Australia’s main trading partner, a slowdown in the worlds second largest economy is likely to have an adverse effect on Australia’s economic output which theoretically would soften the Aussie dollar.
Despite these ongoing concerns, AUD has hit its highest level against the US dollar in a week after some positive economic data released this week. Australia’s trade surplus throughout September was over $3bn which was a higher figure than expected, and this has pushed up the value of the Aussie dollar. The Aussie dollar is also quite closely linked to the Chinese Yuan, and this currency has been strengthening recently which has helped offer the Aussie dollar some support in recent days.
Later today there will be a Bank of England interest rate decision, and Mark Carney, the Governor of the BoE will also be speaking so any references to future plans of monetary policy hold the potential to move the markets. If you wish to be updated regarding any major moves do feel free to register your interest using the form below, I’ll be happy to get in touch personally.