GBP/AUD Forecast (Matthew Vassallo)

Will Sterling Weakness Continue to Help the AUD to GBP Rate Improve?

GBP/AUD exchange rates have dipped slightly during Friday’s trading but the pair is still sitting very close to a 6 year high. Sterling’s momentum over the past couple of months has come in line with an upturn in UK economic data and I do not see a major shift in market conditions in the short-term.

The Australian economy seems to have caught the back end of the global crisis, when for a time it seemed almost immune. A major catalyst for the start of its decline was a gradual fall in the export of its vast supply of raw materials and as regular readers will know this is a key component of Australia’s economy. Without this the extremely high labour costs of their mining sector, along with other facets of the economy start to become a burden and we’ve seen over recent months how quickly the AUD can lose value.

Personally I feel that regardless of short-term spikes in the market the Pound will continue to find support above 2 on the exchange but whether we see another major spike for Sterling will depend on the Bank of England’s stance and whether we hear further talk of an interest rate hike.

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