GBP/AUD Rates Spike Following Poor Australian Export Data (Matthew Vassallo)

AUD GBP Mixed as Central Banks Feel the Heat

GBP/AUD rates have spiked by over one cent during Thursday’s trading, following poor Export figures for Australia overnight.

The AUD had made inroads against Sterling following the on-going market uncertainty surrounding Brexit but this positive move was following last night’s figures.

As regular readers will know the Australian economy relies heavily on the export of its raw materials to China, so any slowdown in this sector inevitable has a negative effect on the Australian economy. In turn this will hurt the AUD, as investors see it as a sign of economic weakness and pull funds away from this commodity based currency and  into safer havens such as the USD or CHF.

Despite growth in the Chinese economy of late, it is very much cloak and dagger in terms of limited data releases and an on-going uncertainty of how well their economy is actually performing.

Up until today’s positive move for Sterling the question many clients having been asking me recently, is whether we will see GBP/AUD rates fall below 1.60 and based on the recent trend this was certainly a cause for concern.

Sterling remains under pressure this week against most of the majors, with the Pound seemingly taking a step forward before being knocked and retracting.

Even today’s Sterling improvement was born from a lack of investor confidence in the AUD not an overriding one in GBP. I still feel sustainable strength for the Pound is unlikely in the lead up to the triggering of Article 50 and the UK’s subsequent detachment from the EU and for this reason I would look to protect any short to medium-term Sterling positions above 1.60.

UK Prime Minister Theresa May has stuck stringently by her deadline of this month to trigger the Brexit bill but this has now been thrown into doubt.

The House of Lords has gone against the House of Commons and voted to guarantee EU citizen’s rights, the first major amendment to the bill. With further changes likely over the coming days, we could now see this passed back to the House of Commons to ratify the amendments and a game of political ping pong could entail.

This would lead to further market uncertainty and the Pound could suffer as a result. If this were to occur then a move back towards 1.60 on GBP/AUD is certainly a feasible outcome.

If you have an upcoming GBP or AUD currency transfer to make, then we can help you navigate this turbulent market by keeping clients up to speed with all the latest developments regarding Brexit and beyond.

If you would like us to monitor the market for you ahead of a currency exchange, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on 0044 1494 787 478 and ask one of the team for Matt.

Alternatively, I can be emailed directly on [email protected].