GBP/AUD: All eyes on Brexit developments - Westpac

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.”