Sterling has strengthened this week with the currency hitting new highs against a number of major currency pairs. The reversal of fortunes for the GBP/AUD pair in particular within the past 2 months stand’s out after the pair dropped as low as 1.72 in January and hit 1.8732 earlier this week.
So far today the pair have attempted to break the 1.87 mark although there does appear to be resistance at this level which was the case back in October also when the pair hit the late 1.86’s before being sold off.
Australian interest rate could lead to AUD weakness
The GBP/AUD pair’s fortunes can be attributed to both Sterling strength along with AUD weakness, especially now that the likelihood of the next interest rate amendment from the Reserve Bank of Australia will be a cut. With the base rate of interest down under sitting at a record low of 1.5% and the next change expected to be a cut there’s a chance we could see the AUD rate continue to drop, although whether it drops further against the Pound is likely to depend on how the Pound fares depending on Brexit.
Brexit updates lead to Pound strength
It’s Brexit related updates that are pushing the Pound higher at the moment as the path to Brexit is now looking clearer, after the dates for the next meaningful vote on the current Brexit deal have been announced. Those of our readers and clients following the markets should be aware that by the 12th of this month the vote on the deal is expected to take place and if it’s voted against, another vote on whether MP’s would approve a no-deal Brexit will take place.
There is also the potential for an extension to Article 50 and this is perhaps another reason for a boost to the Pound’s value, as it limits the chances of a shock to the UK economy. Uncertainty often weighs negatively on the underlying currency so these updates have seen a boost to the Pound’s value against a raft of major currency pairs.
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