The Australian Dollar advanced on the Pound Friday but the antipodean unit is likely to reverse course and cede ground to its British rival in the months ahead, according to new research from Westpac, as interest rate cuts in the UK and Australia are set to leave Sterling with an edge over the Aussie.
Foreign exchange analysts at Wall Street bank Morgan Stanley are entering 2020 with a bearish stance on the Australian Dollar, saying a subdued domestic economy will ultimately prompt the Reserve Bank of Australia into cutting interest rates.
The Pound is already plumbing the bottom of the major currency barrel for 2020 but it could fall further against the Australian Dollar in the weeks ahead if the UK economic newsflow remains downbeat, according to Commonwealth Bank of Australia (CBA).
Weakness in the Australian Dollar is being forecast to remain a feature on global currency markets for some time yet, as a supportive global picture contrasts to growing domestic headwinds that have seen a rapid increase in bets that the Reserve Bank of Australia will cut interest rates to 0.50% in February.
The Australian Dollar outperformed all its major rivals Friday to claim the top spot in the major currency league table after the latest in a run of positive economic figures eased concerns about the prospect of a February rate cut from the Reserve Bank of Australia (RBA).
The Pound-to-Australian Dollar rate recovery appeared to be faultering Thursday as Sterling retreated from a resilient antipodean rival for the second day running, although economic headwinds down under could yet prevent the exchange rate's 'Boris bounce' from being completely undone.