This week all eyes will be on the Reserve Bank of Australia and whether or not they decide to cut interest rates.
Personally, I think they will not make a change to monetary policy at their meeting next week and instead use the method of jawboning which become very popular as a tool to influence exchange rates.
Sterling has hit a 6 year high against the Australian Dollar over the last few days as the price of iron ore fell dramatically and whilst uncertainty reigns over Europe global investors are selling off riskier currencies including the Australian Dollar.
The majority of economists appear to believe that unemployment will rise in Australia according to a Fairfax Media survey published recently.
The same economists also believe that the budget deficit will also increase.
If they are right one would expect the Australian Dollar to weaken which is the same as my feeling in the longer term and I would expect GBPAUD rates to continue to rise with the odd dip in the short term.
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