GBP/AUD rates have 1.82 at the high during Wednesday’s trading, providing some of the best trading levels of the past couple of months. Whilst the UK economy has made steady progression since the start of the year, the Australian economy has stagnated. This has helped to push exchange rates up to the current levels and whilst the Reserve Bank of Australia (RBA) are still keen to see the AUD lose further value (in the hope this will boost exports), a move back towards 1.85 could be on the cards over the coming weeks.
A slowdown in China’s economic growth has been discussed in previous blogs as a major concern for the Australian economy, as China’s demand for their raw materials enabled the Australian mining sector to thrive over the past few years. However, with one of the highest global labour costs, this was only sustainable is the demand continued to increase, or at least remained constant. This has not been the case over recent months and it is likely Australia will have to extend its trade arms over the coming years (as their recent trade agreement with Japan highlights), or face further stagnation.
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