The Australian dollar has made substantial gains overnight following the meeting by the Reserve Bank of Australia last night. The central bank held rates at 1.5% as widely expected however the commentary was slightly more hawkish which has led the markets to believe that there could be an interest rate hike down under in the early part of 2018. The markets had been expecting the first hike sometime in late 2018 and so this change in expectations is helping to strengthen the Aussie.
GBP AUD – Brexit Volatility
Clients looking to buy Australian dollars with pounds have seen a good couple of weeks with some of the best levels available for a year. The more upbeat mood in Britain in terms of the Brexit negotiations has helped the pound rally over these last two weeks although GBP AUD hit a major roadblock in afternoon trading yesterday.
The expected deal between Britain and the EU which focussed on the thorny issue of the Irish border was abandoned yesterday afternoon after the Democratic Unionist Party scuppered the deal stating it was unwilling for Northern Ireland to have different terms to Britain when leaving the EU. The pound dropped against the Australian dollar immediately after the news and we may need to wait until the end of this week or next before new developments emerge.
If no deal can be hammered out then the pound is likely to drop in value quickly although the expectation is that there will be sufficient progress for Brexit talks to move onto trade before the end of next week.
Clients looking to buy or sell Australian dollars are likely to see major new direction in the rates over these next two weeks ahead of the key EU summit 14th & 15th December. Please get in touch to discuss how these event directly impact on the rates of exchange and how it affects your specific requirement. Please email me James at [email protected]