The Bank of England has decided to keep interest rates on hold and to keep the amount of QE at £375bn with no additional funding. This has seen Sterling improve against the Australian Dollar which has hit lows of 1.4590 early this morning. However, Sterling still looks in trouble against the Aussie as interest rates down under were kept on hold this week.
It seems at the moment that investors are attracted to the Australian Dollar for its attractive interest rate yield of 3% which is a great deal higher than what’s on offer in either the US, UK or Europe. This month will be key for Sterling as if we have negative growth at the end of this quarter we will be in a triple dip recession meaning further struggles potentially for the Pound. Investor confidence seems to be bypassing the UK so my prediction is that we’ll see Sterling continue to test historically low levels against the AUD$.
Shortly the ECB will announce their interest rate decision. No movement could see further strengthening for the Aussie as stability continues in Europe. Stability generally encourages more risk appetite for the Australian Dollar. I think the ECB will keep interest rates on hold at 0.75% but keep your ear out for what ECB President Mario Draghi has to say about exchange rate movement for the single currency.
For information about how to ensure you’re getting the best exchange rate when transferring Australian Dollars get in touch for free quote by emailing me directly Tom Holian [email protected]