Selling Australian Dollars Before Brexit (James Lovick)

GBP AUD is in for a rocky few months with a huge amount of news now fast approaching. Not only will Brexit be the dominant theme as far as the pound is concerned but the Australian dollar will be very heavily impacted following President-elect Trump’s inauguration on Friday 20th January.

Brexit in my view will be the single biggest driver for sterling exchange rates as we approach 31st March, the deadline by which UK Prime Minister Theresa May will formally give notice to the EU that Britain is withdrawing from the European Union. The Supreme Court ruling on whether Theresa May must consult Parliament before invoking Article 50 is expected imminently and will give new direction for the pound against the Australian dollar.

Should Theresa May lose the appeal then the pound is likely to make some short term gains as the prospect of a soft Brexit will appear to be more a more likely route to go. However if the appeal is won by the government, which cannot be ruled out then the pound is likely to take very sharp losses against all of the major currencies. Those clients looking to sell Australian dollars could see some good opportunities in the coming weeks could see some good developments following political news.

Considering it was reported today that disgraced Prime Minister Tony Blair is looking to contribute £10 million to keep Britain within the single market it certainly shows that forces are at work and this is all likely to become politically explosive. I would not rule out a general election which in my view would wipe as much as 5% off sterling’s value in this scenario – An excellent proposition for anyone needing to sell dollars!

However the fate of the Aussie will largely be determined by changes in US economic and global policy. With a new President expected to make some seismic changes to the status quo the Australian dollar is one currency that will be heavily impacted. The prospective three US interest rate hikes in 2017 could weaken the Aussie although this is more likely to be a gradual change as we learn more once the new President has been inaugurated.

If you would like further information on the Australian dollar and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk

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