GBPAUD exchange rates have continued to rise this week following the FOMC minutes earlier this week. Since the end of last month the Pound has gained by over 4% against the Australian Dollar and the potential tapering of QE by the US whenever that may be could send AUD even weaker. The less available money available this could lead to a sell off from riskier currencies including the AUD, NZD & ZAR. A fall in money supply is more likely to hamper these currencies and investors could therefore seek safe havens such as the USD or GBP.
The comments made by RBA Governor Glen Stevens said he was rather open minded that they are open to the idea of intervention to weaken the Aussie in order to remain competitive internationally. This has sent GBPAUD exchange rates to their highest level all year and even this morning the rates have continued to surge in an upwards direction in favour of Sterling.
My personal opinion is that any form of QE by the RBA is unlikely and that if anything they will look to cut interest rates in Q1 on 2014. On Wednesday Guy Debelle the RBA’s assistant governor also suggested that they would prefer the Australian Dollar to be lower than where it is at the moment. He also added that the future of the Aussie Dollar is heavily reliant on what happens when the US does decide to rein in its QE programme.
With the recent instability in Europe this has also led to a large sell off from riskier currencies with investors seeking safe havens. Sterling has been the main benefactor of the movement of funds as with our growth forecast recently having been increased investors have chosen Sterling as the safe haven of choice.
If you are thinking about buying or selling Australian Dollars then feel free to contact me for a free quote Tom Holian [email protected]