Daily Archives: October 24, 2018

Brexit talks hinder Sterling vs the Australian Dollar but are Australian house prices set for a crash?

Sterling has continued to drift lower vs the Australian Dollar as the topic of Brexit continues to rumble on. At the moment there are ongoing discussions about the Irish backstop arrangement and the current proposal is to keep the UK in a single customs area during the Brexit transition period which could be extended for another year.

Prime Minister Theresa May has suggested that the deal between the UK and the European Union is practically 95% done but with the Irish border issue far from being agreed I don’t think we’ll see the Brexit talks concluded in the near future and this could continue to weigh heavily on GBPAUD exchange rates.

If we turn the focus towards what is happening down under the Australian Dollar has been weakening against the US Dollar but remained fairly robust against the Pound highlighting the problems faced for Sterling by the ongoing Brexit uncertainty.

Property prices in both Sydney and Melbourne have started to show signs of falling with Deloitte claiming that some house prices are falling by as much as AUD$1,000 in a week.

Prices have been previously going up very quickly and with demand starting to wane this has caused the market to try and correct itself. Historically low interest rates have encouraged large amounts of borrowing and this has fueled the property market and with foreign investors being discouraged owing to previous reforms this has caused the housing market to come under pressure.

In my opinion the Australian economy will come under further pressure in the months ahead as we have also seen Chinese GDP at its lowest point in 10 years but until we get some positive news surrounding what is happening to the UK with its relationship with the European Union I expect Sterling’s advances to be relatively limited.

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Tom Holian teh@currencies.co.uk