It might sound a bit strange if you’re looking at GBPAUD exchange rates and wondering why I am referring to data coming out for the Eurozone but it will hopefully become clear as I explain below.
Eurozone inflation data as well as unemployment levels are released tomorrow morning and if the data is better than expected for both data sets this could see Euro strength and Sterling weaken.
Therefore, this could push GBPAUD exchange rates in a downwards direction .
The Eurozone has suggested recently that it could increase Quantitative Easing which was introduced officially earlier in March this year and if you relate this to GBPAUD rates at the time you’ll notice a bit of correlation.
I think that although Eurozone inflation is clearly a worry for the ECB I think that positive inflation will dissuade them from adding more QE, which could strengthen the single currency.
On Thursday however I think we’ll see rates for GBPAUD improve as the Chinese release manufacturing and services data. As China is the biggest trading partner for Australia any negative release is likely to cause the AUD to weaken.
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