GBPAUD rates dropping – 1.90 on the horizon for the next 7 days

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

The value of the Australian Dollar has been continuing to gain strength against the UK pound and it has not been due to economic wellbeing in Australia but that of worry and concern for the UK.  Along with the UK having a terrible start to the year concerns are now increasing for the future of the UK and its economic wellbeing due to the BREXIT in the UK.  Regular readers will be well aware of what has been happening over the last few months with the downturn for the UK and this saw rates drop down from the highs of near 2.20 all the way down to 2.0.  The news on the Brexit has caused markets to drop below that level and with the high amount of carry trades on this pair, it has entered a phase of free fall.

The latest Brexit update is that of the teams that are being formed who will be campaigning to stay or leave the EU.  Something like picking the football teams on the playground at school as these teams are formed you get a really good idea on the battle for points and the potential winners.  The recent heavy hitters to join the LEAVE campaign has been Boris Johnson, the former Mayor of London and widely expected to be runner as the next prime minister and the Justice Minister.  Boris has a huge following and in that support he could bring to his campaign. The Justice minister yesterday took another swing at the IN campaign by suggesting that the agreements made in Europe over the weekend by the PM are only paper thin, and could be cancelled in the years ahead.  This in turn has been increasing the chances of the UK leaving and that increased uncertainty has resulted in Sterling’s value falling.

HSBC produced a report which focused on the impact of the UK leaving on the economy, in that they forecasted a 20% drop on GBPUSD, parity on GBPEUR and a similar move against the AUD.  It certainly seems that there is more risk rather than opportunity.

Contact myself STEVE EAKINS via email at [email protected] or call 0044 1494 787 478 and ask for me on for more information.

As with any movement on the GBPAUD it is further increased as thresholds are broken and ‘carry trades’ are unwound, changing demand once more and therefore price.

Rates this morning sit at 1.94 and I widely expect rates to drop still as the BREXIT campaign continues, the vote itself is still over 100 days away and as this intensifies it could easily result in the cost of buying the AUSTRALIAN Dollar more and more expensive to buy. Personally I would not be surprised if we were to see rates drop under 1.90 in the relatively near future.

For more information on this topic and how it could impact you please feel free to get in contact.  People buying AUD I would suggest moving sooner rather than later, timing however remains key which is where I can help. Anyone however looking at selling AUD should equally be looking for the best opportunity as levels are currently at record highs for.

Contact myself STEVE EAKINS via email at [email protected] or call 0044 1494 787 478 and ask for me on for more information.