Economists Predict a Break AUD Whilst GBP Softens After Hectic Year

AUD GBP Trades Above 0.5300 Ahead of Consumer Confidence

News for the upcoming week is suggesting that the Australian Dollar is primed for a break to a fresh 22-week high, but this momentum has been slowed mainly due to the fading liquidity. The uncertainties surrounding interest rates for the AUD in 2020 are still present and causing concern for some investors. Meanwhile, for the GBP, it has seen a softening after a rollercoaster year that has been dominated by the Brexit news and the General Election. With the GE over and an EU withdrawal plan being accepted in parliament, the GBP is beginning to settle down as its future becomes clearer to the markets.

AUD Looks to Break to 22-Week High but Uncertainties Keep Investors on Their Toes

AUD remained almost flat against the USD, settling at around 0.6920 which was almost unchanged from Monday’s closing rate. During the London trading hours, the AUD/USD rate was observed to be trading at a level of 0.6925 and 0.6911 versus the US Dollar. Despite positive trading, negative news has surrounded the AUD of late with a lower-than-expected economy growth of 0.4% in Q3 for 2019 hitting investors recently. Pair this with the annual GDP growth rate standing at 1.7% and poor labour market statistics, the economy has been painted in a dire light and has led the central bank (RBA) to slash interest rates to a record low of 0.75% where it currently stands to end the year.

Going into the new year, the uncertainties surrounding the RBA’s decision on interest rate cuts are the main talking point. Economists are suggesting that a further cut could occur by mid-2020. The RBA left the door open for another cut in their December meeting minutes and this has investors worried. Previously the RBA had downplayed the suggestions of another cut and suggested that the outlook looked positive for AUD. Since then they retracted this statement and stated that they will meet in February to reassess the economy in order to finalise their rate decisions.

GBP Settles Down After Brexit and GE Madness

For GBP, its traders will have taken a well-earned rest over Christmas and Boxing Day as the UK markets closed. The year has been full of twists and turns for the GBP. Brexit uncertainties scared off potential investors whilst a Conservative majority optimism was often the driver of positivity throughout the General Election that wrapped up a few weeks ago. Economists have suggested that the GBP is now softening against EUR and USD as the outlook for the UK economy clears up after months of confusion.

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