Aussie Dollar Boosted on Comments from RBA (James Lovick)

The Australian dollar has found a small degree of support this week after Reserve Bank of Australia Governor Philip Lowe made clear that the next interest rate move is more likely to be up rather than down. The last minutes from the RBA signalled that there is unlikely to be any interest rate increase for a very long time so which actually helped see the Aussie weaken. Although the Governor’s comments don’t fundamentally change that much the markets can take it as reassurance that there is likely to be a rate rise possibly next year and this is giving the Aussie a small boost.

GBP AUD exchange rates could see an interesting day and rest of the week on the back of the budget that will be delivered by Chancellor of the Exchequer Philip Hammond today. The well broadcasted budget is likely to see considerable volatility for sterling exchange rates depending on how well it is received. Considering the Chancellor’s failed budget earlier this year he is unlikely to make any drastic changes and his hands are tied regardless as a result of Brexit uncertainty. As such GBP AUD rates are more likely to be impacted by the ongoing Brexit negotiations unless of course the Chancellor makes an epic mistake in which case his position would almost certainly be in jeopardy.

The Brexit negotiations remain deadlocked although a cabinet meeting on Monday evening seems to have unlocked more funds to be offered to Brussels with the condition being applied that the door must open to a future trade agreement. The caveat offered by the British government that nothing is agreed until all is agreed would suggest the UK could if necessary withdraw any offer of a financial settlement it makes and this will inevitable keep the pressure on sterling for the foreseeable future

At the next EU summit the EU leaders will decide if talks will move forward to trade and this is where there is likely to be substantial movement for clients looking to buy or sell Australian dollars with pounds. The summit around the 15th December in my view should see new direction for GBP AUD. Clients with pending requirements would be wise to get in touch at this stage in the run up this event to look at the options available to take the risk out of the market place and top try and maximise on any substantial changes in exchange rates. Feel free to email me James at jll@currencies.co.uk

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