GBP/AUD Rates Remain Volatile (Matthew Vassallo)

AUD GBP on the Retreat with BoE Rate Meeting Due

GBP/AUD exchange rates have remained volatile of late, with aggressive short-term spikes in both directions. The general trend is still Sterling positive but the AUD has found support around the current levels, as we saw earlier this week when the AUD started to put pressure back on 2.10.

Unfortunately for the AUD I cannot see any sustained improvement against the Pound under current market conditions. Whilst the economic instability in China continues the AUD will struggle to gain value, due to the intricate trade links between China and Australia. With political opinion also divided in Australia, many are blaming the current demise of the economy on the Australian government, it is difficult to see a short-term improvement for the AUD.

Australia is primarily a commodity based economy and they rely heavily on the exports of their vast supplies of raw materials, so when exports drop it is always going to hurt their economy and is one of the prime reasons Australia is trying to extend its trade arms, so they are not as reliant on China.

Personally I would be tempted to sell AUD even around the current level and not gamble on what is becoming an increasingly volatile market.

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