Therefore, we would caution against expecting the pound sterling to move meaningfully higher from current levels. The parties are entering a key period in negotiations and anything that suggests an increased potential for a hard Brexit could hurt sterling.

Canadian dollar: Neutral. The Canadian dollar has recovered after a rough February and March. The risk-off market tone that affected the currency late in the first quarter has given way to positive expectations that the North American Free Trade Agreement (NAFTA) negotiations may soon be finalized.

Removal of uncertainty around NAFTA should be a positive for the currency. In addition, oil has strengthened recently on the back of tensions with Syria and Russia, providing another positive catalyst for the currency.

Australian dollar: Neutral. The Reserve Bank of Australia (RBA) held rates steady again at its April meeting. The RBA stated that it expects gradually improving conditions and is committed to remaining patient with economic policy.

It did, however, express concern about the tightening of conditions in US dollar money markets and sees higher short-term rates flowing through to other countries, including Australia. Australia’s trade surplus has narrowed recently due to an increase in imports, while exports have remained stable, despite the current decline in commodity prices. With inflation and wage growth still below desired levels, the RBA is likely to remain on hold for the foreseeable future.

Indian rupee: Neutral. Recent weakness in the rupee was largely driven by equity outflows in February after a new long-term capital gains tax was introduced into the 2018 budget. More recent macro data, however, show a pickup in industrial production and overall growth, which we believe will support the rupee. Higher crude oil prices and a growing current account deficit remain the primary downside risks to our view.

This article has been republished with permission from Invesco Powershares.