Osbourne’s budget has caused Sterling to drop against the majority of major currency pairings. This was primarily due to the drop in the growth forecast. The Office for Budget Responsibility (OBR) had previously forecast that the economy would grow 2.4% this year, but is now predicting a rate of 2.0%. This caused GBP/AUD to drop into the 1.86s, we then saw the Bank of England (BOE) interest rate decision and despite the fact that there was no change the Monetary Policy Committee (MPC) stated there is more chance of a rate hike than a cut. This caused the pound to rally against the Aussie to 1.90.
With the pending EU referendum creating significant economic uncertainty I can’t see any substantial gains for Sterling. If you are looking to buy Australian Dollars short term you may have to bite the bullet. If you are waiting until after the EU referendum it is a massive gamble. A current Financial Times poll shows that 45% of the UK population wish to stay, with 40% ready to leave and the rest undecided. If the UK were to leave I would estimate a 20 + cent drop for the pound. Many clients are considering Forward contracts in order to safe guard against such a fall.
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