GBPAUD falls following drop in UK Inflation

The Pound saw its recent rally against the Australian Dollar come to a quick halt yesterday following on from the inflation report published by the Office for National Statistics. The Retail Price Index fell from 3.3% in March to 2.9% in April. Sterling fell against all major currencies as some analysts saw the data as providing the Bank of England with the opportunity to go down the line of further Quantitative Easing. The Pound fell from its recent highs against the AUD to break back into the 1.54 territory.

In theory if inflation is low this means that the Bank of England may keep interest rates low for longer than previously expected which is negative for Sterling exchange rates. With Mark Carney due to replace Mervyn King next month and the BoE minutes due out at 930am this morning I don’t anticipate too much of a surprise when the data is published.

The problem with a strong Australian Dollar means that consumers in Australia are buying products on overseas websites and taking holidays abroad in order to take advantage of the exchange rate. However, this in turn could have a negative affect on the economy longer term. If you’re considering making a currency transfer and want to ensure you’re getting competitive exchange rates when buying Australian Dollars or selling Australian Dollars then get in touch for a free quote Tom Holian [email protected]