As predicted in my Australian Dollar forecast published earlier in the week we saw GBPAUD exchange rates drop below 2 for the first time in months as Sterling continued to struggle during this week.
The real catalyst for the rate movement was the interest rate cut by Japan which has strengthened all the commodity based currencies as it means global investors will use something called carry trades.
In more layman’s terms a carry trade is whereby an investor will borrow in a low yielding currency and then invest in a riskier more higher yielding currency such as borrowing in Yen and buying Australian Dollars.
The movement seen during the course of today has highlighted this fact and therefore we saw GBPAUD exchange rates drop below 2 for the first time since May 2015 creating the best opportunity to sell Australian Dollars into Sterling for 7 months
For those that have been following my forecasts for the last few weeks I have been clear that I think we could see further falls for Sterling AUD rates as the UK remains under pressure.
Indeed, although UK GDP this week came out as expected however this still showed the slowest growth in over 3 years which has seen a big fall for Sterling exchange rates against many currencies.
The over-riding issue for Sterling is also the fears and uncertainty of the Brexit.
I think we could see further bad news for Sterling as the RBA is due to meet on Tuesday and if there is no mention of an interest rate cut we could see further Australian Dollar strength.
If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian [email protected]
Alternatively call me on Monday from 830am UK time onwards on 01494-787478 and I look forward to hearing from you.