Sean Callow, Research Analyst at Westpac, points out that the Aussie hit a post-Brexit low against the British pound in mid-October as AUD underperformed amid broad yield-driven US dollar gains and GBP found some support on Brexit negotiations.
Key Quotes
“AUD’s recovery since then has been supported by multi-month highs on Australia’s commodity prices, encouraging domestic data and some faltering in sterling sentiment.”
“The coming weeks are vital for whether a workable Brexit agreement is reached so it is hard to have confidence in near term AUD performance versus the pound.”
“Failure to compromise could see a return to GBP 0.57 or AUD 1.75 while positive Brexit news should see a reversal of the recent AUD gains, though perhaps not as far as the early Oct levels, given AUD’s stronger fundamental support.”
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