Australian Dollar continues to outperform Sterling
Despite the Reserve Bank of Australia cutting its interest rate on Tuesday down to the lowest level in its history (1%), the Australian dollar remains strong and yesterday it was actually the strongest performing currency within the G10 group of currencies.
The recent strength for the Aussie dollar has pushed the GBP/AUD pair below the 1.80 level which had previously been a psychological level of support but now that we’ve seen the pair break below this level it looks like the pair could continue to soften and trade towards the mid and lower 1.70’s.
US China trade war: Positive news from trade talks strengthens AUD
Apparently trade talks between the US and Chinese negotiators are going well, and this has resulted in stronger global equity markets along with a boost to the kinds of currencies that belong to global based economies such as Australia and Canada. When the Reserve Bank of Australia decided to make the interest rate amendment the tone was a ‘watch and wait’ one which was less negative than market commentators had expected, and this has also aided the Aussie dollar’s value as many had expected to hear a dovish tone and plans for further rate cuts in future.
Sterling weakness as political uncertainty continues
The weakness in the pound looks set to continue owing to both political uncertainty and poor economic data releases. The next Prime Minister will be voted in by the Conservative Party later this month. Whilst this continues I think the pound could see further pressure and yesterday poor Services data resulted in downward pressure for the pound to Australian dollar exchange rates, as this sector covers around 80% of the UK economy so a slowdown is likely to result in weakness for sterling.
There are no major economic updates due out of the UK or Australia this week, so I expect to see sentiment continue to be the biggest driver for the GBP/AUD pair. If you would like to be kept up to date with movements in GBP/AUD exchange rates, you can register your interest with me using the form below. I look forward to hearing from you.