Sterling Australian Dollar exchange rates fell towards the end of the week as the ECB announced an interest rate cut from 0.25% to 0.15%. They have also introduced negative interest rates for banks holding money with the ECB.
This means that although the ECB has decided to provide banks with long term cheap loans they will at the same time also charge them 0.1% to hold money with the bank.
The main aim of this policy is to encourage the banks to lend to get the Eurozone economy back on its feet in an attempt to stop inflation from falling further.
However, the good news for the Australian Dollar is that it means global investors that may have previously chosen to hold funds in Europe will now be looking for higher yields and with the Australian interest rate the highest out of all the western economies this news could help to strengthen the AUD as demands goes up.
Tomorrow morning we see the release of some very important Chinese data that could have an impact on GBAUD exchange rates. Chinese trade balance is expected to be USD22.6bn for May so anything different could cause some volatility.
Confidence is a key indicator as to how the economy is performing and often has a large impact on exchange rates. On Tuesday the National Bank of Australia’s business confidence survey is released for May.
With the economy looking in reasonable shape in the last month I would expect this survey to be strong and could see GBPAUD rates fall from their current levels.
Prediction for the week is Australian Dollar strength.
If you have a currency transfer coming up and want to save money on exchange rates compared to using your bank then contact me directly for a free quote Tom Holian [email protected]