The pound has been steadily making gains against the Australian dollar over the last 6 months, but over the last few weeks GBPAUD exchange rates seem to have leveled out in the higher end of the 1.70s.
The UK coming to an agreement with the EU at the end of last year in regards to the divorce bill, EU citizens rights and the Irish border helped the pound to strengthen. Couple this with the RBA continuing to state interest rate hikes are unlikely throughout 2018, this is the reason why GBPAUD exchange rates have been improving.
Towards the end of the week UK Prime Minister Theresa May will address the UK public and provide a well needed updated. At present the commentary coming from head EU negotiator Michel Barnier is that the UK are still trying to cherry pick and the EU will not allow this. Quite clearly this speech has to potential to have major implications on the direction of GBPAUD for the upcoming months.
In other news the US are set to release a few data releases on Thursday which could have an impact on Australian dollar exchange rates. Core Consumption expenditure is set to released at 1.30, ISM manufacturing PMI 3pm and new Chairman of the Fed Jerome Powell, will give a speech also at 3pm.
Yesterday Mr Powell, gave a bullish speech about the US economy which helped to strengthen the US dollar and commodity currencies came under pressure. I wouldn’t be surprised to see this trend continue throughout Thursday.
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