GBP/AUD rates dropped during Monday’s trading, with pressure being put back on 1.84, having started the day up around 1.86 on the exchange. Sterling has continued to perform well against the AUD of late and it would be no surprise to see today’s loses reversed over the coming days. Despite the fact that Sterling’s good run seems to be running out of steam against the other major currency pairs, I still believe that the AUD has further scope for market weakness. The Reserve Bank of Australia (RBA) seem unconcerned by the major market loses experienced and feel that a weaker AUD will help to enhance their flagging export industry. The Australian economy is heavily reliant on the export of their raw materials and in particular the demand in China for these. China’s economy has continued to grow at such a pace that it has supported this demand in the past but now, as their demand slows, Australia’s exports have weakened and this is part of the reason their economy has stagnated over recent months.
Economic data to keep an eye on this week includes tomorrows UK Inflation report and Australian construction data. Inevitably though, the key data will be the release of Wednesday’s UK Gross Domestic Product (GDP) figures, which is likely to cause additional market volatility and could boost the Pound further if figures are positive.
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