The AUD has come under some pressure against Sterling of recent days, although on-going Brexit concerns are still handicapping any major advances for the Pound.
GBP/AUD rates moved close to 1.80 overnight and despite the AUD finding plenty of support around this level, it seems as though the Reserve Bank of Australia (RBA) minutes released overnight have had an impact on market sentiment.
The AUD had been performing solidly of late, with the Pound struggling to make any impact as negotiations over Brexit continue to move at a snail’s pace.
With the UK government split on its preferred strategy, the Pound has found little market support over recent weeks.
However last night’s RBA minutes, which give investors a key insight into the central banks current economic stance, seems to have dampened some of the recent positivity.
They suggested that the current record low interest rates in Australia were helping to support the economy, an indication that they were unlikely to hike the base rate in the short-term.
The most poignant piece of information however, referenced a concern that any further increase in value for the AUD would lead to a slower rise in inflation and economic growth. This meant that the central bank may well look to “jawbone” the AUD, which is when they will look to talk down the currency’s value, without introducing any official devaluation methods.
This in turn has caused investors to sell-off their AUD currency positions, which is probably why we have seen the AUD weaken this morning.
In the short-term concerns over Brexit will continue to shackle any spikes in value for Sterling, with the AUD likely to find an element of protection around the 1.80 threshold.
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