The pound to Australian dollar rate is looking more and more fragile in recent weeks yet has remained in the higher 1.60’s and even over 1.70 since the beginning of September. With wage growth a concern and consumer confidence starting to slip there is a growing concern there will not be any interest rate hikes for some time down under. This has seen the Australian dollar weaker as investor debate the next move from the RBA, further weakness on the Australian dollar would not be too surprising at all.
Buying Australian dollars with pounds has become much less costly in the last month as the pound surged on an expectation the Bank of England might raise interest rates next month. Coupled with mounting concerns over the dates for any possible Australian interest rate hikes GBPAUD climbed to some of the best rates since June.
Despite the inherent uncertainty over Brexit the pound is much better supported on renewed belief the UK Government under Theresa May will deliver Brexit. With a transitional period being discussed to extend the time frame for when the UK legally leaves the EU, there is now scope for the pound to find more support.
Whilst uncertainty over Brexit and a renewed confidence in the Aussie could see us shift lower in the the mid 1.60’s or even lower, for now the outlook seems to favour GBPAUD in a range of 1.68-1.73, I see it finding supporting above 1.70 in the next few weeks.
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