Will we now hit 1.80?!

AUDGBP: Sterling Breaks Out from Stubborn Range

GBPAUD buyers have been spoilt over the last few months with the rate climbing significantly. The Australian dollar which had seemed to be able to do no wrong for so long has finally unwound and rates seem to for the time being…

The rate has shifted some 30 cents in the last few months. This massive shift has occurred for a variety of reasons:

1 – AUD strength was primarily due to strong Chinese economic data. Chinese demand for raw materials (many located in Australia) had kept the australian economy buoyant. Many have regarded falling Chinese demand as bad news for the Australian economy.

2- This commodity boom has fueled massive growth in Australia and meant interest rates were high to cap inflation. Now things have started to slow down, interest rates have been lowered which has also caused the currency to weaken.

3 – The AUD has been used by investors to earn money as a safe haven currency. Whilst not technically a safe haven currency, the higher interest rates had made it very attractive for investors to leave money. As investors have lately sold off their positions, the AUD has weakened.

So quite simply the mood on the Australian dollar has changed and it is unlikely we will see a major return in sentiment to lead to the kind of levels witnessed earlier in the year which were all time highs. Sterling has many suggest, finally turned a corner and this will further ensure rates remain at the higher end for the time being.

If you have a currency transaction to consider and would like to get a better rate of exchange you can speak to us. For a free, no obligation discussion of the the current trends and how we work, please contact me Jonathan on [email protected] or call 01494 787 478.