The GBPAUD rate has been rather negative over the last few days with a fall of over 5 cents compared to the highs seen last week. This has been put down to both an improving picture of AUD, especially with China trades being signed off, and UK data poor. It is a trend which has I think stopped overnight and we should see a slight recovery over the next few days as traders take profits. Keen a watchful eye on UK data on Thursday and US data on Friday for more movement but I do expect this afternoons market to be rather stable.
Personally I see 1.80 as an achievable target this week.
Longer term be wary for the political play taking place in the UK. The PM has been fairly negative recently and I expect this to continue as Labour start their campaign for the elections next May. The next government budget is released in early December and with little policy change expected so close to Christmas the release will have everybody’s attention. It is likely they will paint a poor picture and lean on the fact that everyone should stay with the plan as many see the economic argument to be their strongest. This is a topic which will become increasingly important in the months ahead with the general election now only 6 months away. It is widely expected to weaken the pound as uncertainty intensifies.
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