The Australian dollar has weakened sharply after Australian GDP (Gross Domestic Product) data saw fresh concerns over the Trade Wars weigh on the AUD. This highlights just how volatile this pairing is after moving close to 6 cents in just a week.
The pound to Australian dollar exchange rate could be about to enter an extremely volatile session as we get closer to the Parliamentary vote on Brexit in the House of Commons next week. The pound has been under real pressure against a much stronger Australian dollar as the market begins to question the likelihood of Theresa May getting her deal through Parliament.
GBPAUD rates could easily hit 1.80 if the Aussie continues to be sold off, but we would probably need to see a positive outcome for Theresa May from the Parliamentary vote. This doesn’t look likely and this might be a reason for Australian dollar buyers to capitalise sooner rather than later on the recent improvements. There is a real prospect that sterling could plunge next week as either Theresa May is forced to resign, or the prospect of a second referendum or a general election increases.
Key events in the next week aside from the Parliamentary vote on the 11th include UK Unemployment figures and a statement from the RBA, (Reserve Bank of Australia) next week. Whilst such events may influence shorter term movements, the market view of Brexit and Trade Wars seem likely to be the key points to consider.
I foresee GBPAUD rates in a range between 1.70 and 1.80 in the next week, I do feel we are at the higher ranges likely on the pairing, given the potential uncertainties for sterling which we know can cause some large movement on this currency pair.
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