One of the main reasons for the recent period of Australian Dollar strength vs the Pound is down to RBA governor Glenn Stevens’ quotes earlier this week claiming that interest rates will remain the same for the time-being.
With many industry experts expecting an interest rate cut imminently by the RBA the announcement shocked the currency markets and provided the Australian Dollar with much needed strength vs Sterling.
The RBA are due to meet next week and I think we could see further strengthening when Stevens talks again on Tuesday.
To me I think the Australian economy will need to act in the future to cut interest rates to help the economy which has struggled in recent times owing to the slowdown in China who are Australia’s main trading partner.
On Wednesday Australia announces GDP figures with expectations for 2.3% growth so any fall could contradict the comments made by the RBA governor earlier in the week.
With the Eurozone also due to release their own interest rate decision on Thursday I expect to see a huge amount of volatility for Sterling vs Australian Dollar exchange rates next week.
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