GBPAUD rates improve as prospect of further rate cuts loom… Underlying Reasons for AUD strength remain

AUDGBP Strengthens Against but AUD Lower Against USD and EUR

As highlighted in earlier posts the RBA – Reserve Bank of Australia has stated and left the door open for further rate cuts in the future. Historically an interest rate cut weakens the currency concerned and indeed the AUD has weakened against most currencies today. However the overall picture and reasons for AUD strength remain. If you are planning a transfer involving the Australian dollar in the future it looks highly likely the Aussie will continue to appreciate or at least retain much of the strength that has held it at close to record levels against most currencies.

This was shown quite clearly against sterling since in the last month the pound has generally found support against a basket a currencies as the immediate threat of more QE was removed. The GBPAUD rate however fell as the Aussie found favour among traders. This was a reaction to improved market sentiment regarding China. Chinese economic data is still strong and whereas in the summer many panicked thinking that China was about to suffer a hard landing, we have actually seen the data paint a slightly rosier picture.

I therefore feel that the Australian Dollar will continue to remain strong in the future despite fears over a Chinese slowdown and indeed concerns over further rate cuts. These two issues will however provide spikes for those buying Aussies to take advantage of.

For a full no obligation discussion of all the events surrounding your currency transfers you can contact me for information. Jonathan Watson jmw@currencies.co.uk 01494 787 478