Chinese Growth Slows and AUD Exchange Rates

AUD GBP Higher after Inflation Data, Sunak Budget Ahead

As we come to the end of 2012 this year has been one of the quietest on record in terms of range for GBPAUD exchange rates. With the Australian economy heavily reliant on China and its growth it could be argued that one of the reasons why AUD exchange rates have remained strong against Sterling is because of what has happened in China and their demand for Australia’s natural resources. The Reserve Bank of Australia has cut interest rates a number of times during this year and even rate cuts have done little to improve GBPAUD exchange rates.

However, as China announced recently its GDP figures have fallen for the 7th quarter in a row which could show signs of a slowdown. With a recent change in government they have committed to maintaining strong GDP figures which are currently forecast for 7.5% not bad when we compare this to the UK, Europe or the US. I think we’ll see a small movement in the upward direction during the first quarter of 2013 as the UK retail sales come out which I think will show positive signs for the UK economy and therefore an improvement for Sterling exchange rates.

Over the next few days the US Fiscal Cliff issue will need to be resolved as time runs out. The developments in the US have yet to create a deal between the Democrats & Republicans to avoid the enormous tax hikes and spending cuts due to take place next week. This could send the US into recession causing investors to move money away from riskier currencies including the Australian Dollar. The next target rate for GBPAUD exchange rates is 1.56 so feel free to contact me if you have a currency requirement to make over the next few weeks. Email me directly Tom Holian [email protected]