The value of the Pound has had a largely nervous and tentative beginning to this year, but for the first time rates for buying Australian Dollars have held their value following a significant improvement.
The root cause for the positive movement was a speech pencilled in last minute by Theresa May, finally releasing her objectives to the marketplace for the upcoming negotiations.
The fundamental point which was taken away from her speech, from the point of view of the financial markets at least, was that she heavily outlined a framework for Parliament’s continued involvement in the Brexit discussions and eventual decision making on the matter.
Parliament is seen as a moderating actor. A feature of the evolving Brexit landscape which will delay rather than accelerate, and one which tends to urge caution rather than bolder or extreme measures. Personal politics aside, the currency market as a whole has shown repeatedly that they wish for the UK to avoid a quick and hard exit from the EU, and on numerous occasions this worry has translated into a weaker Pound with its value being questioned.
The Supreme Court is set to rule next week on whether Parliament will be involved in the actual triggering of Article 50, but the hints given in May’s speech suggests she already knows the answer. The announcement will come next Tuesday at 9:30am. As such buying Australian Dollar rates may see improvement in the medium term.
However, AUD buyers should be wary that in the run up to March and the anticipated deadline for the triggering of Article 50, further political news and comments will continue to be released.
The last time Theresa May discussed her aims for the Brexit in an interview setting GBP/AUD fell by close to 2%, which was less than two weeks ago, and her counterparts across the Channel in Europe have also expressed their own tough words to the detriment of the Pound in the past. GBP/AUD fell by over 4% in a single day when the October ‘flash crash’ on the Pound was instigated by choice comments made by Francoise Hollande and Angela Merkel, the French and German Heads of State.
The closer we creep to March, understandably this market will be more twitchy and nervous, creating a portrait of greater downside risk for Australian Dollar buyers.
As such the sensible option would be for AUD buyers to take advantage of the recent gains, or see next Tuesday as the final point of opportunity – as after this, there is little more to be decided until the official commencement of the process to leave the EU in March. Effectively this should create a ‘sweet spot’ of opportunity for Australian Dollar buyers before this period begins.
Conversely, Australian Dollar sellers, based on your personal timeline, do not face the same level of urgency. The likelihood for a nervous market to produce sudden opportunities to buy the Pound fairly cheaply being quite high.
If you are planning to make a currency exchange involving the Pound and another foreign currency, it’s well worth your time getting in contact with me on firstname.lastname@example.org in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible.
You can also speak to me directly on the phone by calling 01494 787 478 and asking reception to speak with Joshua.