GBPAUD exchange rates have remained strong this week following the recent RBA interest rate cut and the widening of the country’s trade defitict to a 3.5 year high. With demand for iron ore and other commodities from China having slowed down recently, part of the RBA’s decision to cut interest rates was to give the economy a kick start by weakening its own currency. With the base rate currently siting at 3.25% we could see further rate cuts over the next few months but even if the RBA goes down this line it may not have the desired impact on the exchange rate as globally Australia leads the charge in terms of investment in its interest rates. Indeed with the Australian Dollar the strongest in four months the next challenge will be to see if the exchange rate tests levels of resistance at 1.60.
I have found this article very interesting which covers a story relating to Australian central bank chief Glenn Stevens http://uk.reuters.com/article/2012/10/07/uk-britain-boe-stevens-idUKBRE89606Y20121007 The article covers rumours that after Mervyn King’s current tenure is over we could see Stevens as the new head of the Bank of England. The benefit of having an ‘outsider’ is that he comes in fresh with new ideas as to how to challenge the banking industry often cited as the catalyst for the credit crunch of 2008 and the subsequent four years of slowing global growth.
Angela Merkel travels to Greece on October 9th to discuss how to sort out the civil unrest and to put more confidence into the country and in the meantime at least a full Spanish bailout has been avoided. This has caused a strengthening of the Euro and presents the opportunity for riskier investors to pluck for the Australian Dollar newt week in the short term.
For further up to date information as to how the AUD might perform or if you have a currency requirement pending and want to save money compared to using high street banks please feel free to email me directly Tom Holian [email protected]