The Australian dollar has come under some renewed pressure following the Reserve Bank of Australia’s interest rate decision on Thursday. As expected the central bank held rates steady at 1.5% but its tone on the future outlook was not as positive as expected resulting in some dollar weakness.
Data is light from Australia as we end the week so focus now moves to Australian business confidence numbers released on Tuesday.
UK data however is likely to see further volatility for GBP AUD after the National Institute for Economic and Social Research release their GDP forecast tomorrow afternoon. The numbers represent an excellent precursor to the official numbers released later in the month.
GBP AUD, Brexit & the French Election
The pound has rallied well against the Australian dollar making decent gains with rates almost breaking through 1.66 for this pair.
British politics surrounding Brexit will continue to be the single biggest driver for GBP AUD exchange rates and any confrontation between Britain and the EU in these coming weeks and months could see the pound weaken sharply. This is only the start of a long and extremely complicated negotiation which already has not gone off to the best start with the Gibraltar mix up. Those clients looking to buy Australian dollar may be wise to consider taking advantage of the current spike we are seeing for this pair.
For anyone that is hoping sterling exchange rates will move higher in my view would need to see a big problem in either Australia or the Eurozone for this to happen. The French election is one such consideration. Should Presidential candidate Marine Le Pen win the French election then the pound in my view would rally against most currencies including the Australian dollar. However, the polls are putting Emmanuel Macron in the lead so it is not very likely that Marine Le Pen would win. Those clients willing to take a punt should be aware of the potential opportunity if it happens! With both Brexit & Trump proving many wrong then I would not rule anything out.
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 [email protected]