Will the Australian economy continue to grow and the impact on GBPAUD Exchange Rates

GBP to AUD Steady as Markets Consider BoE and RBA Rate Cuts

In Australia the economy seems to be at its strongest for 10 months and expectations are for this to continue as the RBA is likely to further provide stimulus to the economy. According to the well respected Chief economist Bill Evans from Westpac ‘the growth rate is the fastest since September 2011 and it will improve in the latter half of 2012 and into early 2013.’ Clearly the mining sector has kept the Australian economy strong and therefore GBPAUD exchange rates have remained in the range of 1.51-1.54 in recent weeks. The central bank kept its interest rates at 3.5% last month as confirmed in its minutes released yesterday but there could be a chance of a rate cut in August to help the economy outside the mining sector. GDP is currently at 1.3% in March for Q1 which compared to UK, Europe or the US is very impressive.

The AUDUSD has hit its highest level in almost two weeks as the Federal Reserve suggested last night that it would take steps to stimulate the economy. Possible scenarios include the Fed going down the route of Quantitative Easing for the third time shortly and therefore keeping both the Australian Dollar and New Zealand Dollar strong against the US Dollar and therefore strong against Sterling and the Euro.

With the Australian economy expected to continue its growth we could see exchange rates for GBPAUD drop below 1.50 towards the end of this month. For information as to how to save money when transferring Australian Dollars please do not hesitate to contact me Tom Holian teh@currencies.co.uk