It’s been a volatile few weeks for GBP/AUD exchange rates but the main theme has being continued weakness in the value of the AUD against GBP. The pair have moved over 13 cents in the past couple of weeks, a huge swing which would equate to the difference of over 22,500 AUD on a 200,000 GBP/AUD currency transfer. This is a key example of why it is essential to stay in close contact with your currency broker, to ensure opportunities like these are not missed.
The reasons for this aggressive move are varied but a key component are the recent Reserve Bank of Australia (RBA) minutes, coupled with poor economic data from China. The RBA still feel the AUD is too strong, which is negatively affecting their export industry and as soon as a central bank admits this, it is likely the prospective currency will weaken as a result. Add to this concern over a slowdown in Chinese economic growth and it has conspired to push GBP/AUD back to the current levels. I do not expect this trend to continue back to the four year highs witnessed last year but similarly the AUD may struggle to gain any serious momentum until there is another shift in market conditions and a change of stance by the RBA.
Looking ahead and we have a Financial Stability review overnight, followed by the RBA annual report and RBA governor Glen Stevens speech tomorrow. These are likely to be key market movers and if there is any change in stance by the RBA we could see the AUD start to recover some of the ground it’s lost against GBP over the past couple of weeks.
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