Supreme Court Ruling could hinder May’s Brexit plans
Yesterday saw the release for the supreme court judgement on whether parliament will vote on the triggering of article 50. It was very difficult to predict which way the market would move when the result came through. Theresa May’s speech recently made it clear her intention was for a hard brexit, which could be seen as detrimental to the UK economy and many would expect Sterling to suffer against the Australian Dollar as a result.
Sterling actually strengthened against the majority of major currencies following the release of her plans for Brexit. The markets do not react well to uncertainty, with May’s announcement it proves that bad news is better than no news. The supreme court ruling has now given parliament the right to vote on the exit bill, the big question is whether May’s plans to leave the single market and the customs union will be approved. Labour are sure to try and throw a spanner in the works. It seems the ruling has created more unanswered questions and that is why we have yet to see a significant rally by the pound. There is sure to be volatility over the coming months.
Interest Rate Hikes in the US could cause the Australian Dollar to suffer
The Federal Reserve increased interest rates in December and forward guidance has indicated there could be as many as three more in 2017. This has caused the Australian Dollar to become less attractive to investors. With higher levels of return than previously in the US and the fact that the US Dollar is now considered a safe haven it would not surprise me to see many investors moving toward the US dollar as apposed to the Australian Dollar. This could be even more significant if Australia lose it’s AAA rating.
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