Will GBP/AUD Rates Dip Further? (Matthew Vassallo)

Australian Dollar Forecast: AUD Holds Firm Against US Dollar

The AUD has found some support against GBP over the past couple of weeks, with the pair moving back towards 2.10 at the low. This is a marked improvement on recent levels, with the AUD slipping below 2.20 only a few weeks ago. Many investors had expected this slide to continue, with the Australian economy suffering heavily due to a major slowdown in their economy, particularly their export trade. This was due to the on-going problems facing the Chinese economy, who as regular readers will know are Australia’s largest trade partners and although they are by no means out of the woods yet, a couple of factors seem to have eased some pressure in the short-term.

Many investors had anticipated the Reserve Bank of Australia (RBA) would cut their base interest rate further, in order to help ease pressure on the economy but when this did not occur the markets took it as a positive and a sign of strength and this positively impacted the AUD, which gained value as a result. The Australian economy also received a boost with a huge spike in Chinese tourism, which again helped breed some market confidence. These factors combined have helped to drive GBP/AUD rates down and I feel the AUD will now find support under 2.20.

These was some key data releases this morning for the UK, with the latest Bank of England (BoE) interest rate decision and subsequent minutes. As anticipated rates were kept on hold at 0.5% and with an 8-1 vote against a rate hike, conditions have not changed from last month. With no rate hike foreseen until at least the 2nd quarter of 2016, we may find the AUD puts pressure on the 2.10 mark over the coming weeks.

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