Today has seen a major weakening for GBP – AUD (and also GBP – NZD). The primary reason is due to poor US Non – Farm Payroll data. There is a well known saying that, ‘When the USA sneezes, the world catches a cold’. We have seen the biggest movement for AUD since April, just over two cents in two days. Not only is the size of the movement of interest, but the fact that Sterling has pushed through 1.70 with such aplomb is a measure of the overwhelming belief of investors that the Reserve Bank of Australia will cut the interest rate on Tuesday.
Should we not see an interest rate cut on Tuesday, I believe that we could see a correction on the exchange rate immidiately, as the rate cut expectation has been ‘priced in’. Therefore, should you be looking to buy Australian Dollars, I would be tempted to buy before the rate decision, so take advantage of the rate spike, but eliminate the risk of a rate drop.
Should you have a exchange to do, please feel free to drop me a line… 01494 787 478