The state of limbo we’ve been suffering with Sterling this week has show tentative signs of breaking as we head into the weekend, with buying Australian Dollar exchange rates rallying during Friday morning trading.
This prolonged period without clarification on Government policy towards such a sensitive issue as Brexit has left currency investors unsure what to do. There has been such little buying and selling activity involved around the Pound that GBP/AUD has been moored in the high 1.60’s since Monday.
This should all change next week.
The Government’s manifesto will be debated on in Parliament next week to be voted on on Thursday/Friday, before the close of June. Hints of a softer Brexit with Theresa May’s speech at the EU summit today have markets less concerned at the prospect of a tumultuous exit for the UK, and therefore Sterling saw a comforting boost in the morning.
End of week financial flows however halted Sterling’s rally. At the end of the week capital tends to be allocated in the more stable currencies. A camp which Sterling understandably hasn’t occupied for some time. So you tend to see Sterling selling off in favour of the likes of the US Dollar and Swiss France, with the Pound losing out through decreased demand in general.
But if it wasn’t for these clockwork trading patterns before the weekend, AUD sellers would have seen glimpses of what is expected to happen next week. A consolidation of this limbo period since the election, and confirmation of any softer approaches for the Brexit should both play well for Sterling’s value in the eyes of currency markets. Both have a high likelihood of occurring next week, even the Brexit Minister David Davis said as much.
So whilst Australian Dollar sellers are seeing higher urgency to act sooner rather than later in the final week of June, Australian Dollar buyers may consider waiting until the end of next week to secure their AUD purchase.
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I have never had an issue beating the rates of exchange on offer elsewhere, so a brief conversation could save you significant sums of money on a prospective transfer.