Article 50 Has Been Invoked! GBP AUD Reaction (James Lovick)

Will Sterling Weakness Continue to Help the AUD to GBP Rate Improve?

Whilst the pound made some small gains against most of the currencies it failed to make any further headway against the Australian dollar after Article 50 was finally invoked yesterday. Rates actually slipped lower for GBP AUD having been performing well in the last week. Rates managed to break through 1.65 in the run up to yesterdays events before falling sharply to the 1.62 levels at about the time the letter was made public.

Where the pound moves from here against the Aussie will be dependent on the European response to the British government. One major sticking point is how the Brexit negotiations will take place. The European Union have made clear that there should be two separate negotiations – One for the Exit bill and the second for any future trade deal. The British position is clear that the two should be carried out together. This early hurdle could create substantial volatility for GBP AUD exchange rates and so the political element of Brexit will continue to drive the pound. Any statements from European leaders in these coming days could create substantial volatility for the pound. A strong line from the EU which is likely could see GBP AUD fall below 1.60 again.

Data in Australia is light as we end the week so focus will now shift to a raft of economic data next week. Monday sees Retail sales number for Australia and building permits which are both good barometers of the consumers market as well as the housing market. Most importantly the Reserve Bank of Australia interest rate decision is held on Tuesday and any change in direction form the central bank could see the dollar react. The RBA are unlikely to raise interest rates as things stand so any change of policy may see the dollar move accordingly.

If you would like further information on Australian dollar exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk