Sterling has made gains on its AUD counterpart this week, with the pair moving above 1.64 during Thursday’s trading.
The Pound has benefited from the UK’s Brexit bill being ratified through the House of Commons and whilst it still needs to be approved by the House of Lords, many think this is now merely a formality.
This positive sentiment has helped boost Sterling’s value but the key question now is whether this trend will continue over the coming days and weeks?
Personally, I would be wary about gambling on sustained Sterling strength under current market conditions. What is very apparent in my mind is that the UK economy remains extremely fragile and as such, Sterling exchange rates are likely to continue to fluctuate more aggressively than usual in the short-term.
Any delay in the bill being approved is likely to sap investor confidence and this would likely to cause the Pound’s value to dip once again.
Looking back over recent weeks and its apparent that every time the Pound takes a step forward it is knocked back and despite this week’s upturn, I fear a similar scenario could occur. I don’t feel there is enough confidence behind the UK economy as of yet to drive GBP/AUD rates through 1.70 and whilst market conditions can change quickly and aggressively, are you prepared to gamble on the pair, with a move back to 1.60 just as likely based on recent trends.
The Pound has also been supported this week following a fairly dovish tone form the Reserve Bank of Australia during their monthly policy meeting and with no rate hike imminent in Australia
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