Are GBP/AUD Rates Heading Back to 2? (Matthew Vassallo)

AUDGBP Tries to Recover from Recent Lows with RBA

GBP/AUD exchange rates have spiked again during Thursday’s trading, with the pair hitting 1.9653 at the high. This move has continued on from yesterday’s positive momentum and once again it seems as if the Pound will now have back toward 2 over the coming weeks.

However, as regular readers will know GBP/AUD is one of the most volatile trading pairs and therefore any market spikes can be quick and aggressive. Only a week ago it did seem as if the AUD was heading back towards 1.90, before an upwards revision of UK Gross Domestic Product (GDP) figures pushed rates back up.

Whilst Sterling has gained across the board I’m not convinced this trend will continue as the Bank of England have already voiced their concern at the two year low seen in factory orders, which ultimately means our export industry is suffering. They will likely try and control Sterling’s value if it were to rise any further against the EUR and if they do this the knock on affect is likely to be a negative for the Pound.

We also need to consider that the UK general election is now only a month away and this is likely to dominate the media focus and headlines over the coming weeks. This could cause uncertainty in the markets, which in turn could cause the Pound to weaken. However, it is likely that the Reserve Bank of Australia (RBA) will hold the key as we have their latest interest rate decision next Tuesday. Up until now they have been committed to lowering the value of the AUD and until this stance changes I believe the AUD will struggle to make any sustained inroads.

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