GBPAUD has been rather stagnant this week at the kind of levels stated above. I feel this is because investors are keenly awaiting the outcome of the Greek debt talks and also possibly US Non-Farm Payroll data this afternoon.
As Michael stated yesterday the Aussie has climbed by nearly 8% since November touching an all time high against the pound. There has been a major return to percieved riskier assets in the last month. The last half of last year saw investors flee such assets which is why sterling comfortably broke 1.60 on the Aussie. The recent change in trends has seen the Aussie strengthen. Will these sentiments remain?
Some view Europe as a ticking time bomb and it is fair to say that some big shocks emanating from the Euro crisis will cause the Aussie to weaken. Conversely signs that it is being dealt with will cause the Aussie to strengthen. It is clear the rate will not just remain in the current levels seen above and will break free soon. Normally when a trend develops on the Aussie it isn’t just a couple of cents movement, it can be 3 or 4 cents as investors move large sums to take advantage or cut their losses.
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