The pound to Australian dollar interbank exchange rate has touched its highest in 23 weeks today, or since Monday 6th May, at 1.8757. By comparison, British sterling was as weak as 1.7689 versus the so-called Aussie on Wednesday 31st July, so it’s since strengthened by +6.03%.
GBP is enjoying gains versus the AUD because of rising hopes among money managers that a Brexit deal may be reached soon.
Meanwhile, the Australian dollar has weakened, because economists have cut their forecasts for Australia’s economic growth in 2019, the RBA (Reserve Bank of Australia) may cut interest rates further, below their current all-time low of 0.75%.
Sterling strengthens versus the Aussie, as Barnier calls Brexit deal “possible”
British sterling has reached this 23-week high versus its Australian counterpart today, because the EU’s Chief Brexit Negotiator, Michel Barnier, has told journalists that a Brexit agreement this week is “difficult but possible”.
This has strengthened the pound, because there’s been growing speculation about whether the UK and EU can find common ground ahead of this Thursday EU summit, or even before the current Brexit deadline of October 31st.
Mr. Barnier is one of the EU’s most senior figures, so if he’s more optimistic that there’ll be a Brexit deal, this bodes well. It’s thought that, if the UK retains closer economic and political ties to the EU after Brexit, this will benefit the UK economy, thereby lifting the pound.
Australian dollar weakens, as economists reduce growth forecasts
The pound has gained in value versus the Australian dollar is because respected economists have cut their GDP forecasts for Australia’s economy for 2019, says a new Reuters poll.
According to the survey, Australia’s economy will now expand by just 1.9% this year, down from September’s forecast for 2.1%, and 2.7% predictions earlier this year.
In addition, the RBA could cut interest rates below their new all-time low of 0.75%, according to Australia’s central bank’s latest minutes, released today.
The Reserve Bank added that Australian household debt was “considered high”. This too has contributed to weaken value of the Aussie dollar.
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