Whilst Brexit remains the biggest threat to the UK and thus Sterling, there does remain room for further movements which could benefit Australian Dollar buyers. As long as Article 50 remains on the backburner until 2017, economic data for the UK could continue to trend positive, until the real threat of Brexit i.e. Article 50, begins to impact business and consumer spending.
With the upcoming US elections coupled with the FED’s decision to hold off on eagerly awaited Interest rate raises, investors will likely move away from the US Dollar and into higher returning currencies such as the Australian Dollar and New Zealand Dollar.
An expensive Australian Dollar is negative for the RBA, a country that is heavily reliant on its exports performs better with a cheaper currency. Therefore, could the RBA look to cut rates again this year to weaken its currency?
I am of the opinion that the RBA may need to cut rates again in the near future, whilst inflation has seen some positive uptrend since they dropped their rates to a historic low. I am of the view that they will need to weaken their currency again before Christmas which could give AUD buyers a welcomed opportunity.
GBPAUD is currently trending at a month high of 1.75201, I am predicting ranges close to 1.76 by the end of the week.