Two surprise features have seen Pound to Australian Dollar exchange rates slightly test recent lows once more, with the Aussie being given a severe leg-up against its competition.
Growth date for the Australian economy was the key market mover, coupled with news emerging from China.
Growth expected for the Dollar at 0.7% for Quarter four of last year was blown out of the water. Instead the Australian economy grew by 1.1% in a single quarter. The improvement may not sound incredible, but each 10th of a percent represents billions in revenue.This also assuaged fears from the previous month which showed a contraction for Australia of -0.5%. This now means that Australia is still recession free for 25 years, and markets have noticed.
The Dollar has been the largest winner on the currency markets today.This positive view of the Australian economy was given a further boost by positive Chinese business confidence data. Painting an optimistic picture for the size of the consumer market for Australia’s exports.
However, GBP/AUD has seen resistance levels at 1.60 multiple times since the Referendum, and this was showing once more today, with markets recovering as the afternoon wore on.
Commonly termed a resistance level, this is a psychological point where most traders will seek to consolidate their profits from a stronger Dollar by buying up a relatively cheaper Pound.
Given that the market has been here multiple times before without further progress, in my opinion we will likely see a repeat of previous performance where the losses on the Pound balance out, and could even recover.
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