GBP Strengthens Amid Speculation RBA Will Cut Interest Rates
We have seen further strength for GBP against AUD, as the world waits to see if the RBA (Reserve Bank of Australia) will cut their interest rate from 2.75%. It is common for Markets to ‘price in’ an expectation for what is going to happen, so the current gains could be a strong indicator to the outcome tomorrow morning. Should RBA cut the rate, I believe that we will see a further weakening towards the mid 1.70s, asking the question of whether 1.75 will be the next point of resistance?
Should the rate not be reduced, there is a chance that AUD could strengthen and claim some ground back against GBP, possibly pushing rates back under 1.70.
I am inclined to think that we will see a cut and therefore a spike for GBP. If you are looking to SELL AUD, I would look to look to put in a ‘stop loss’ which is basically a ‘worst case scenario’. this means that should the interest rate decision move the market against you, you would have a safety net in place and purchase the currency before any spike goes against you.
If you are looking to BUY AUD, the current levels mean you would be trading at best figures for 3 years. Sterling has spiked by 27 CENTS this year so far, would it be worth buying now and be pleased that you didn’t buy at 1.50 in May!?
Either way, please feel free to drop me a line if you have a transaction in mind. There are various options available and it is worth taking advantage of these tools, when the market is so volatile.
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