Will GBPAUD break 2 or fall back into the 1.80s (Dayle Littlejohn)

With Australian inflation falling 2 weeks ago it made sense for the RBA to cut interest rates from 2% to 1.75% last week as Glenn Stevens had been talking down the Australian Dollar for weeks as exports were becoming too expensive due to the overvalued Australian Dollar.

The question clients are asking now when buying Australian Dollars with Pounds is should they take advantage of the recent spike or wait and see if rates break through 2. At the moment both Sterling and the Australian Dollar are weakening. The question is which currency is weakening more than the other.

I would see due to the major fall in inflation and a cut in interest rates at the moment I expect GBPAUD to potentially increase by a cent or two however in the lead up to the referendum especially after June the 1st I expect GBPAUD will begin to fall once more back to towards the higher 1.80s.

Data releases this week

Wednesday in the early hours of the morning Australia release their latest Home Loan orders. A substantial fall is expected therefore expect Australian Dollar weakness early Wednesday.

Later in the day the UK is set to release their latest Industrial and Manufacturing data is at 8.30am Wednesday. Manufacturing has been falling recently due to the fear of a ‘Brexit’ therefore I expect the figure to fall again leading to sterling weakness.

The Bank of England releases their latest Interest rate decision Thursday. I expect the vote will be a non-event due to being unchanged. However Governor Mark Carney press conference shortly after will be interesting as I wouldn’t be surprised to see the main topic of conversation being the EU referendum.

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