It’s been a volatile time for GBP/AUD exchange rates recently, with uncertainty surrounding the Australian economy handicapping any sustained spikes for the AUD. The AUD has started to realign itself following a poor run against the Pound with rates moving back toward 1.85, after trading above 1.90 over Christmas.
An improvement in Chinese data helped to alleviate that pressure and in fact it is the Asian markets, in particular China’s demand for Australia’s raw materials, which can drive AUD exchange rates. The Australian economy has always relied heavily on the export of its vast supplies of raw materials. If this demand slows then quite simply the Australian economy will suffer because of it.
We also need to consider Reserve Bank of Australia (RBA) governor Glenn Steven’s stance, as he feels the AUD is still overvalued and negatively affecting exports and it is likely that this feeling will be reflected in the market.
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