Sterling Australian Dollar exchange rates have broken past 2 for the first time since mid-February as predicted in some of my previous articles.
The recent interest rate cut by the Reserve Bank of Australia earlier this month combined with the announcement of the election in the next few weeks means that the Australian economy is on uncertain ground at the moment.
There is a chance that we could see another interest rate cut at some point in the future as revealed by the RBA’s minutes published recently. Australian inflation was lower than expected earlier in the year and therefore we could see further easing which has caused the Australian Dollar to weaken vs Sterling.
However, arguably the biggest reason for Sterling strength this week vs the Australian Dollar is due to a recent opinion poll which showed that the ‘Remain’ camp is leading vs the ‘Leave’ camp.
The bookies in the UK have cut their odds from 1-3 to 1-5 on and they are usually fairly accurate with their predictions. Sterling has increased against all major currencies and I think we could even see further gains over the next few days.
UK Retail Sales came out much better than expected this morning by 4.3% from the expectation of 2.5% which has surprised the markets and provided further support for Sterling.
With US jobless claims due out later today this could cause even further volatility for the Australian Dollar and we could see further gains for Sterling against the AUD towards the end of the week.
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