AUD Forecast – Brexit Developments Putting Pressure on the AUD (Matthew Vassallo)

AUDGBP Advances from 2020 Support Level

The AUD has come under some pressure this week despite the Reserve Bank of Australia’s (RBA) optimistic outlook, following the release of their monthly minutes overnight.

The AUD has lost ground against its Sterling counterpart this week, with the Pound hitting 1.8266 at its high today.

The AUD was finding plenty of protection around 1.80 but now this threshold has been broken, the key question is whether the AUD is likely to fall further.

Looking at the catalyst behind the current trend and there is no doubt that the current loses against Sterling are the result of a breakthrough in Brexit negotiations.

Reports yesterday confirmed that a Brexit transition deal has all but been reached and this boosted investor confidence in the UK economy, which was to the detriment of the AUD.

Despite the initial positive reaction it seems as though investor confidence cooled, with some key issues still to be resolved. These include the Northern Irish border, which has proved a red herring up until now. Unless an agreement is reached over this, it is likely that we will see further negative reports surface, which in turn could put some pressure back on the Pound.

The AUD found some support today, following the RBA’s minutes released overnight. As has been the recent rhetoric, the RBA remained bullish in their global outlook and also internally regarding the prospects of the Australian economy.

Despite this bullish outlook, the AUD is fighting something of an uphill battle with the global markets under pressure at present. This in turn is causing investors to sell off riskier assets such as the AUD, instead choosing to move into safer haven currencies such as the CHF or USD.

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