GBP/AUD rates continue to float around 1.75 on the exchange, with the AUD finding plenty of support around this threshold.
With much of this week’s focus on yesterday’s UK Autumn budget, clients holding the AUD may have anticipated a negative market reaction to this and a drop in value for the Pound.
The result was almost a non-event for the currency markets and in truth the budget very rarely has a major impact on exchange rates.
Yesterday’s “safe” budget was always unlikely to throw up any major surprises. UK Prime Minister Theresa May and Chancellor of the Exchequer Philip Hammond were already under severe pressure, both inside their own Conservative party and externally as well. The former is trying desperately to rally the country in the wake the on-going stagnant Brexit negotiations, whilst the latter was under the spotlight following the disastrous budget he delivered in March.
The key points delivered by Hammond, included Stamp Duty on all properties valued under £300,000 for first time buyers, higher road tax for diesel cars and an additional 2.8 bn for the NHS.
However, despite these claims economic growth forecasts for the UK were cut, which has been directly attributed to the on-going fall out from Brexit.
Fear over the UK’s economic standing following our eventual separation from the EU continue to drive market sentiment. With investor confidence minimal the Pound is struggling to make any significant inroads against the AUD.
The Australian economy is itself under the microscope somewhat. Rising property prices and an over reliance on their export of raw materials, is predicted to put pressure on the AUD over the coming months. =
Whilst the markets never move simply in one direction, I do not anticipate GBP/AUD to gain any sustainable momentum above 1.75. However, due to the issues mentioned above the Pound may well continue to find enough support above 1.70 as we head towards Christmas.
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