The problems in Europe have managed to stay reasonably quiet for the past week or so which, coupled with the Reserve Bank of Australia holding off on an interest rate cut has led to the Australian Dollar gaining back some ground against the Pound and various other major currencies. An interest rate cut is generally seen as negative for the currency concerned and a rate hike is seen as positive due to making it less attractive to investors, therefore the mere fact that the RBA decided not to cut has meant that we have seen a short term spike in favour of the AUD.
Because the Europeans have temporarily swept the huge problems under the carpet we have seen attitude towards risk slowly gather pace which has also led to the AUD pushing on a little. If you are looking to buy Australian Dollars then further large problems within Europe becoming front page news again instead of the U.K bankers would be welcomed and should push the rate in your favour.
Tomorrow is also key as we have the interest rate decision and press conference for the European Central Bank and the U.K interest rate decision. Should the BOE decide to inject further Quantitative Easing into the U.K economy we may see the Pound weaken, last time around members of the BOE voted just 5-4 against it which suggests the decision was fairly tight and that just one more member changing their mind may lead to it being introduced… QE is usually seen as negative for the currency concerned.
On the other hand the European Central Bank are due to release their decision shortly after followed by a press conference, which is notoriously shaky and can lead to high volatility for both the Euro and currencies that are linked to risk so be aware they may throw anything into the mix.
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