What are the key factors in my GBP/AUD trade? (Daniel Johnson)

AUD GBP Looks to Data to Continue Recovery

Brexit still the main influence on GBP/AUD levels

I feel Sterling is currently undervalued against the Australian Dollar. The main reason behind the pound’s weakness is the uncertainty surrounding trade negotiations. The currency market does not react well to uncertainty, this was demonstrated recently by Theresa May’s recent speech outlining  her Brexit plans. She let it be known her intention was for a hard Brexit, this would be deemed detrimental to the UK economy short-medium term. The general consensus would be for Sterling to suffer against the Australian Dollar. In fact, some certainty was added to the Brexit process and Sterling rallied.

House of Commons Debate continues on Exit Bill

Today MPs are set to vote on whether to give Theresa May the right to trigger article 50. Government is expected to get their wish and the bill will be pushed through. There are some rebellious Labour MPs which could oppose the bill against Corbyn’s will and the Lib Dems may well attempt tot throw a spanner in the works. Due to the result already being anticipated to go in favour of the government, this may already be factored into GBP/AUD so do not expect huge swings in value.

The exit bill was brief to say the least at 130 words and leaves little to go on. However a “white paper” document is to be released over the next few days giving a much more detailed Brexit plan which MP’s can debate and push for revisions to. This will take place between 2nd-8th February. If there are revisions expect volatility on GBP/AUD.

Trump to impact GBP/AUD

Trump may well have a significant effect on the value of the Australian Dollar moving forward. If his proposed trade tariff on the Chinese goes through it will have major implications for the Aussie. This is due to Australia’s heavy reliance on China . There is also the possibility of up to three rate hikes this year from the Fed. If these hikes do occur the US dollar will become far more attractive to investors than the riskier Australian Dollar. Australia are also predicted to lose their AAA credit rating by May. Australian Dollar sellers may wish to consider moving at current levels.

I feel longer term Sterling will rally once trade negotiations start to become more apparent. It is crucial to be in touch with an experienced broker to take advantage of Spikes in your favour. We can keep you notified of any changes in the market and events that will potentially move the market. I will provide a free trading strategy and also provide a comparison against your current provider. You can trade with peace of mind knowing you are trading with Foreign Currency Direct, a company trading for over 16 years. Simply provide a brief outline of your currency requirement and I will endeavour to get in touch at my earliest opportunity. Please do get in touch if you would like my help. You can reach me by e-mail at [email protected]. Thank you for reading.

Daniel Johnson