GBP has been riding the crest of a wave against the AUD recently and it is a prime example of how quickly market sentiment and exchange rates can shift, almost in the blink of an eye.
It wasn’t long ago that the AUD was at an all time high against Sterling and it did seem as if the momentum the AUD had built would continue to move the currency from strength to strength. At this time thoughts of even 1.50 seemed like a distant memory but fast forward and we are suddenly looking at the prospect of seeing 1.70 on the pair before long. This recent shift has come about ever since the Reserve Bank of Australia (RBA) made the decision to cut their base interest rate in May and the UK economy was boosted by a run of more consistent economic data. There has also been talk of further rate cuts by the RBA which is going to affect market confidence in the Australian economy and ultimately the strength of the AUD.
Whether we do break this next resistance barrier will be a hot topic of debate but if we do see further rate cuts by the RBA this year then I think it is probably likely. The RBA are concerned that the AUD was becoming too strong and would ultimately hamper their export industry and this is the reason they are trying to drive the value of the AUD down.
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