The Australian dollar rate has been struggling to find its feet against its counterparts, but against the pound it has made notable progress owing to Brexit uncertainties. The Australian dollar is volatile owing to US-China trade concerns and acts as a barometer of this topic and global trade in general.
The Australian dollar should remain rather sensitive to the headlines on both Brexit and also trade concerns as US President Donald Trump is scheduled to meet the Chinese leader Xi Jinping in Argentina later this month. The Australian dollar is stronger on the loose expectation that some kind of deal can be reached, but the market is very cautious.
Pound to Australian dollar rate forecast
I think that trade concerns will continue to act as a drag on the Australian dollar but the outlook will ultimately be determined by the outcome of such events. What seems to me likely is Trump will continue to talk a strong game but will be quite quick to back down and seek a compromise. Such a ‘compromise’ should help the Australian dollar to rise.
The pound seems like it will continue to remain on the back foot as Mrs May’s Parliamentary Brexit deal continues to be the subject of speculation. What could be very interesting is the fallout on sterling should MPs reject her plan. With the EU saying they will not renegotiate on the terms, there is a very strong possibility of us having a no-deal Brexit which would lead to sterling weakness.
Pound to Australian dollar rates might reasonably drop below 1.70 in such a scenario, particularly if there is progress on the Trade Wars to support the Aussie dollar. I expect that ultimately a deal will be reached on Brexit and feel GBP/AUD rates back above 1.80 most likely by the end of 2018. However, the chances of severe volatility in the interim period, whilst the market debates this prospect, seems very high.
If you have a position to buy or sell Australian dollars against the pound, there are many important and difficult events coming up to move rates. Trying to accurately predict such movements is very difficult but we aim to guide you through the scenarios and help formulate a plan to minimise risk and maximise opportunity.
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