Research Team at ANZ, notes that the AUD/GBP is trading at a new post-Brexit high and the recent leg higher has come as UK Prime Minister Theresa May announced the UK will leave the EU by the end of March 2017.
“With the AUD likely to remain range-bound, we expect upside to this cross to come from the GBP leg.
In the coming months we anticipate the GBP will fall into a 1.20-1.25 range vs USD. Admittedly, historic valuation metrics suggest it may be cheap, and the GBP did squeeze higher during August as economic data surprised on the upside. However, until there is more certainty over the UK’s future economic framework, a large risk premia is likely to remain priced in. Furthermore, a large current account deficit (5.9% of GDP) should also weigh on sterling.”
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