Sterling has been given a huge boost overnight and shot up nearly 2 cents versus the Aussie as Mark Carney, the Governor of the Bank of England, said at his Mansion House Speech that UK interest rates could go up sooner than expected. He has been hugely worried about the massive increase in the housing market risking a boom posing “the greatest risk to the domestic economy”. A rise in interest rates may help curb borrowing and cool the housing market, but it is also great news for savers and investors as they can get a better return on their funds, making the pound more attractive.
For the last year or so, UK economic data has been steadily improving with the unemployment rate falling sharply, GDP rising, and house prices increasing rapidly in some areas. However the pound hasn’t really made the headway you would have expected because the Bank of England have continually sounded a cautious note about the prospect of interest rates rising, suggesting it would still be some way off and a very slow increase. This hint at a change in stance has now allowed the pound to appreciate and helps with long term forecasts.
Again the sea-saw around 1.80 continues so I would be inclined to buy over this level, and if you are selling Aussie Dollars to sell under it. If you have a currency transfer to make and would like help getting the best exchange rate please feel free to email Colm at [email protected] and I would be happy to explain how our services work.