Pound very close to year highs against the AUD, is there more to come?

Australian Dollar Looking Bullish

In early morning trading the pound hit its highest level against the Australian Dollar since 2nd January reaching a high today of 1.5460 bringing Sterling’s gains against the dollar to nearly 10 cents since the beginning of April, but will this trend continue? Sterling’s moves came following the Bank of England quarterly inflation report  in which Mervyn King (head of the Bank of England) was to indicate that the banks growth forecasts have upgraded and they have forecast that inflation levels will fall faster than previously indicated.

This data was to continue the UK’s recent run of stronger data and has painted a slightly more positive picture for the pound as a result. This all bodes well for AUD buyers and I still feel some more value will be seen for GBP/AUD rates for those that can be patient.

For anyone selling AUD I would still urge you to take advantage of rates that are historically still very favourable. The average trade price for GBP/AUD for the last year sits around 1.54, so with levels currently at the year average it is not all doom and gloom. For me the current trend and sentiment from Australia is a concern and I would expect rates to move towards 1.55 as I feel the central bank is still concerned about the strength of the Aussie and the impact this is having on the value of Australian exports. I would not be surprised to see another interest rate cut within the next 3 months, something that could devalue the AUD further.

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