The GBPAUD exchange rate dropped from its recent 12 week highs as comments made by ECB President Mario Draghi gave rise to further appetite for riskier currencies again. He pledged to buy potentially an unlimited supply of Euro zone government bonds in an attempt to stabilise the Euro zone and the currency itself. This led to a huge positive movement for global stock indices including banking shares which welcomed the positive comments. The ECB will in theory buy as many government bonds necessary in order to reduce bond yields which has stifled the Euro zone economy recently. This should make borrowing less expensive and easier to do. Short term 3 year bonds have initially been targeted but his has also brought down the cost of longer term borrowing again positive for the Euro. Further, this is not solely aimed at Spain and Italy but also other countries which have received bailouts since the crisis began.
However, the bond buying process also means that the countries involved will still need to adhere to the austerity measures required by the ECB. This means unfort8unately that the plan is still subject political will on behalf of the project so all it not as positive as things may first appear. The recent comments have certainly buoyed the Australian Dollar which has strengthened by 3% in as many days coming as an unwelcome surprise to those needing to buy Australian Dollars.
The news from China out this morning was relatively disappointing but owing to teh stability back ion Europe this has meant investors choosing to buy Australian Dollars and this is likely to continue for the next couple of days. if you have a currency requirement to exchange Australian Dollars and want to ensure you’re getting the best exchange rate for your currency transfer it is important to deal with a currency specialist. If you have any questions please feel free to email me directly Tom Holian [email protected]