GBPAUD rates falling but how long will it last? STEVE EAKINS

The Australian dollar as many regular readers is impacted by a number of subjects outside of their central banks control. That being the economic health of China and the cost of its raw materials it exports around the world. As we know global growth is slowing hence the reason why GBPAUD levels climbed at the end of last year breaking the level of 2.0.

Through 2016 rates have not been anywhere near as volatile as we have seen elsewhere in the world, that is until yesterday. Yesterday China released their latest GDP figures which showed a contraction to the lowest levels of growth seen in 25 years.  This in turn you would expect to weaken the AUD making it more expensive but that was not the case. Even though the figures were poor for China they were not as bad as expected and as a result we actually saw the AUD strengthen. Thereafter in yesterday afternoon’s trading session we had an even which weakened the GBP significantly. This being commentary from the Bank of England suggested interest rates will remain at these record levels for a prolonged period. It seems the road to recovery for the UK has been lengthened by a further 12 months as forecasts now don’t expect an interest rate hike until maybe May 2017.  Further GBP losses were seen as a result meaning GBPAUD levels now are at the lowest level seen through 2016 so far.

Moving forward I personally think that GBPAUD levels will recover and that we will see rates climb once more. I based this view on the widely anticipated further drop in commodity prices as global growth continues to slow meaning oversupply in these markets continue to result in their prices to drop.

If you would like more information on the timing of any transfer or indeed live prices please feel free to contact myself STEVE EAKINS via email at [email protected]