It’s been a volatile couple of weeks for GBP/AUD rates of late, with both the Pound and the AUD threatening to build momentum at different junctures. Initially it looked as if the AUD may make a move back towards 1.90 and with the uncertainty created in the build-up to the UK election, this was looking like a distinct possibility.
However, as often happens the currency markets can move aggressively and unpredictably and the Pound immediately gained market support following last week’s election result and the on-going concern over the slowdown in China’s economy. With China and Australia so inextricably linked due to their trade agreement; any slowdown in China’s economy invariably has a negative effect on Australia’s and ultimately the AUD.
Personally I feel that GBP/AUD rates are likely to head back up towards 2 over the coming weeks, unless there is a change in stance from either central bank and/or a change in market perception surrounding China, which could lend itself to some AUD support.
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