The GBP AUD exchange rate plummeted to its lowest levels since July 2013 on Friday, as Brexit jitters and a sharp drop in Sterling value presumed to have been caused by a trading error undermined GBP levels. The pair began its recovery attempts on Friday, and could continue to recover well into next week depending on market sentiment.
Pound (GBP) Exchange Rates Undermined by Erroneous Trade
The Pound has traded with a downward bias for the past week, as concerns build on the high likelihood that Britain will see a ‘hard Brexit’ and completely lose access to the European Union’s single market.
As the EU market is a huge boon for British business, UK markets have shown widespread distaste for this news by selling off the Pound en masse.
Sterling dropped even lower on Friday due to a potential rogue trade. Speculated by analysts to have been a mistaken trade made during the Asian session, the Pound slumped across the board and spent the rest of Friday attempting to bounce back from these fresh lows.
Australian Dollar (AUD) Holds Ground on Solid Domestic and Commodity News
Sentiment for the Australian Dollar has been sturdy despite mixed demand for risky currencies this week, as the ‘Aussie’ continues to be a reliable currency to invest in for those looking for higher yields.
Tuesday’s Reserve Bank of Australia (RBA) meeting left traders more confident after yet another month where policymakers agreed to take a neutral tone on monetary policy, continuing to indicate that 2016’s easing cycle was over.
Australian data published in Friday’s Asian session boosted AUD slightly, as AiG’s construction index score improved from 46.6 to 51.4. Sturdy prices in the iron ore market also helped the ‘Aussie’ hold its ground.
GBP AUD Exchange Rate Forecast: Sterling Recovery Possible Next Week
Next week’s session will be quiet in terms of key data, with only a few UK datasets publishing throughout the week – most of which are low influence.
Sterling traders may take this opportunity to buy the currency up from Friday’s lows uninterrupted, using the past week’s largely optimistic PMIs and hopes of less easing from the Bank of England (BoE) as a supportive ground.
However, with Brexit news continuing to have a hold on markets that often has a greater-than-expected effect, it is possible that Sterling could remain weighed down.
As for the Australian Dollar, it is possible that demand for risk-correlated currencies will be affected by the 2nd US Presidential debate – which will be held on Sunday.
If markets are stable the ‘Aussie’ could remain strong next week. The week’s Australian data includes September business confidence and October consumer confidence, giving the ‘Aussie’ a solid chance to influence the GBP AUD exchange rate.
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