- Brexit remains the biggest threat to Sterling
- US elections and lack of FED interest rate raises could force RBA to cut rates
- UK economic data could continue its positive trend in the short term
Whilst Brexit or at least the thought of Brexit, remains the biggest threat to the British economy and thus Sterling, I am forecasting further strength for GBPAUD exchange rates as we approach November/December. This does depend entirely on one major factor, Article 50.
As long as Article 50 remains on the backburner until 2017, economic data for the UK will likely continue its positive trend. It will take time for the impact of the vote to find its way into economic data creating a lag effect, which explains why I expect Sterling to fall in the early months of 2017.
With the upcoming US elections coupled with the FED’s decision to hold off on eagerly awaited Interest rate raises, investors will likely move away from the US Dollar and into higher returning currencies such as the Australian Dollar and New Zealand Dollar.
This in not ideal for the RBA, a cheaper Australian Dollar is ideal for an economy that relies heavily on its exports. And with China being one of its largest trading partners, AUDCNY exchange rates are trading at 20 month highs. Could the RBA look to cut rates again this year?
I am of the opinion that the RBA may need to cut rates again in the near future, whilst inflation has seen some positive uptrend since they dropped their rates to a historic low. I am of the view that they will need to weaken their currency again before Christmas which could give AUD buyers a welcomed opportunity.
If you have an upcoming Australian Dollar purchase to make, or you have Australian Dollars to sell for Sterling. I would be more than happy to assist you with any requirements you have. As an experienced currency broker we understand the markets and what impacts currencies.
You can reach out to me at [email protected], I look forward to hearing from you.