Sterling saw a very gradual decline throughout last week, yet anyone with a Pound to Australian Dollar interest managed to keep their buying position intact, the same could not be said for Euro and Dollar buyers.
The reasoning for the Pounds decline was due to key shifts in the Brexit debate between the House of Lords and the Commons.
It seems increasingly likely the House of Lords will be defeated on their first attempt to alter the Brexit Bill. They had not even yet tried to secure a gaurantee for a Parliamentary vote on any eventual deal reached with the EU, which was the main feature currency markets were hoping to be delivered.
This caused a gradual sell-off of Pounds since Wednesday, however, Pound to Australian Dollar exchange rates did not see the same 2% decline in Pound to Euro and Pound to US Dollar rates. This is for two key reasons:
Firstly, the 1.60 mark has been a key resistance level for the Australian Dollar for some time. We have hit this point on multiple occasions since October, yet this point has yet to be breached.
Due to the repetative moves to this point, investors are quite happy to take the considerable gains made on holding their Australian Dollars and convert to Sterling. This ‘balances out’ the rates given that demand for Sterling in the pairing suddenly spikes, and its value against the Dollar corrects upwards in a similar fashion.
Secondly, poor trade balance data for Australia contradicted what had been a fairly positive run of economic data in recent weeks.
Next week, there is little economic news expected to be released until Thursday, so this current narrative may see a gradual decline in the Pound’s status against other currencies. But the question is whether this resistance level will continue to hold firm?
I believe so. As such, as I have said on multiple occasions over the past five months, this is a fantastic selling level to convert Australian Dollars to Pounds and should not be sniffed at. Many people have been dissapointed by continuing to hold on for further gains on multiple occassions.
As such, depending on your timeframe for a transfer, if you having a foreign currency requirement involving Pounds and Australian Dollars, it’s well worth your time getting in contact with me on [email protected] in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible.