Australian Dollar Looks Set for Breakout to End the Year but 2020 Surrounded in Uncertainty

Pound to Australian Dollar Exchange Rate Summary: GBPAUD Rises to Two Week Interbank Highs

AUD has had an up-and-down week, with uncertainty for the future being the main negative focal point for the currency. But optimism has been evident in places with Australian shares rising this week. The outlook for the Australian Dollar is enshrouded in uncertainty and investors are concerned with the direction the RBA may take with their monetary policies going into the new year.

Slow Week for Australian Dollar, Uncertainties Remain but Optimists Look to Defy Negativity

For AUD, the week has been relatively slower than most others in the year. With the festive period in full swing many of the markets around the globe settled down for Christmas and Boxing day. However, the uncertainties surrounding AUD going into the new year have remained. The outlook for AUD is leaving economists tipping an interest rate cut from the RBA by mid-2020. Despite this, some remained optimistic and predicted that the futures market would open-up around 10-15 points at the start of last week. This gave a boost to Australian stocks and AUD as a whole. The optimism has also carried through to the RBA who stated that they are expecting an economic growth figure for Australia in 2020 to be at around 2.75%, rising to 3% in 2021.

Outlook for AUD Looks Troublesome, With Interest Rate Cuts Looking Likely

Looking ahead to the next few weeks leading into the new year, the main theme that surrounds AUD is uncertainty. This uncertainty is mainly due to the mystery that surrounds the RBA’s upcoming decisions on interest rate cuts. With having made three cuts already in 2019, the final meeting between the RBA in December saw the rate being kept at 0.75, but analysts are tipping the first cut to be made by the central bank as early as mid-2020. Should this be the case then AUD will lose strength in the global market as it rebuilds with a lower interest rate targeting a boost in the Aussie economy.

Some analysts are expecting AUD to breakout this week according to recent charts but with the weight of the uncertainty on AUD’s back this will do little to sway the currency as it is still on course to record narrow losses against the US and GBP. Positivity could arrive in the form of further details from the US-China trade talks. Little has been released about the deal agreed upon but many in the trading market are waiting to hear more as it will likely boost the global economy. Particularly for the AUD as a China-sensitive currency, it will likely receive a welcomed boost if details emerge. This is something that investors will be hoping for in the week after Christmas as a late gift.

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