Overnight the news has broken that Parliament has approved the Brexit bill which now means that the UK government can officially trigger Article 50 and the UK can open negotiations to leave the European Union.
At some point today Royal Assent is also likely to be granted but he trigger is not expected to happen until later on this month.
The problem by triggering it at this moment is that the Dutch elections take place tomorrow and the Scottish National Party are due to hold a conference and the main point made by Nicola Sturgeon will be calling for a second Scottish referendum.
The problem of Scotland having another referendum is that we saw huge losses for Sterling against all major currencies in the run up to the vote and so I anticipate that we’ll see further problems ahead for the Pound vs the Australian Dollar and I wouldn’t be surprised to see GBPAUD rates fall below 1.60 on the Interbank level during the course of this week.
Scotland did not want to leave the European Union and will be active over the next few months trying to put obstacles in the way of the Brexit talks.
Sterling has fallen against all major currencies including against the Australian Dollar and it appears as though Article 50 will not take place until towards the end of this month as suggested by Brexit secretary David Davis.
In terms of economic data Chinese Industrial Production came out better than expected which has also given the Australian Dollar a boost vs the Pound.
Tomorrow the US Federal Reserve will announce its latest interest rate decision and the likelihood is that the US will hike rates and as this is almost guaranteed to happen it may not have the usual effect on the Australian Dollar which will often weaken the Aussie Dollar.
Currency markets tends to price in news so this time around I don’t expect any real negative movement for the Australian Dollar.
My prediction for the rest of the week is further strength for the Australian Dollar vs the Pound.
If you have a currency requirement to either buy or sell Australian Dollars and would like to save money on exchange rates compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.
Tom Holian [email protected]