GBP/AUD rates have moved through 1.76, with the Pound continuing to find market support this week.
With the 1.75 resistance barrier now broken, clients will be questioning whether the current run will carry the Pound up to, or even through 1.80?
Whilst there is no doubt that Sterling has gained a foothold, much will depend on how the media portray Brexit negotiations over the coming days and weeks. On Australia’s side, the current focus surrounds the slump in iron ore prices, Australia’s largest export.
Investors will be looking at the current slump with some concern, with prices tumbling from $90 highs in February, to just over $60 per tonne. This was put down to recent oversupply but with China’s (Australia’s main purchaser of iron ore) economy clouded in mystery, there are many variables to consider and the AUD has lost investor confidence as a result.
Whilst the current malaise is likely to restrict any major advancements for the AUD, I still feel that investor confidence in the UK economy and the Pound, is fragile at best.
The Pound initially found support following the announcement of a UK general election in June and the likely result of a Conservative victory, bringing an element of stability to the markets due to the continuity it will bring over the coming years. However, this positive spike did cool somewhat and based on some worrying reports recently regarding the UK’s Brexit negotiations and how tough they are likely to be, are you prepared to risk losing the gains made for Sterling over the past month?
My overall feeling has been that clients holding the Pound should be looking for short-term market opportunities, rather than hold out for long-term sustainable gains whilst so much uncertainty around the UK economy remains.
For this reason, I would be looking to take advantage of the current rates and not gamble on what is likely to be a very rocky road ahead for the UK economy, whilst investors will always remain somewhat cautious when it comes to commodity based currencies such as the AUD, when the global markets remain fragile.
If you have an upcoming GBP or AUD currency transfer and would like to be kept up to date with all the latest market movements, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt.
Alternatively, I can be emailed directly on [email protected].