GBP/AUD rates moved back above 1.90 overnight following incredibly low inflation figures for the Australian Economy. Buying rates for Australian Dollars are now at 6 week highs following what had been a sustained negative run on GBP/AUD since the start of February.
Waking up to the news and saying this was a surprise is an understatement.
Inflation rates are a key indicator to the health of an economy and current spending activity, and these are largely used to inform interest rate decisions by the likes of the Reserve Bank of Australia.
The potential for a cut in rates has been on the cards for a while, but for more than 10 months this is something which was talked about but never acted on. When markets saw that inflation levels turned negative for the first time this year at -0.2%, rather than the stable 0.3% expected, this caused concern that this may be revisited once more.
However, I feel that markets have overreacted heavily to the news.
Similar to the UK who recently had an improvement in inflation due to an early Easter creating increased prices for air fares (skewing the data released in a more positive direction), with the Australian economy winding down from the high tourist season this is likely the same reasoning behind this sudden fall.
The Australian economy has been performing very well in most other areas which are reflective of a more stable trading partner in China and a boost to the commodity markets from their absolute lows in February.
Frankly, buying rates for Australian Dollars would have improved even further if the news about the UK’s poor growth in the first few months of this year hadn’t balanced out the weakening effect on the Australian Dollar throughout the day.
Rates were already starting to trickle down from their highs as trading continued into the afternoon, and with the Referendum coming into greater focus in May, Australian Dollar buyers may be wise to seize these recent gains, bearing in mind that as GBP/AUD rates were touching on the 1.7’s a very short time ago.
I strongly recommend that anyone with an Australian Dollar buying requirement should contact me on [email protected] in the wake of this sudden turnaround to discuss a strategy for your transfer in order to maximise your Australian Dollar return.
I have never had an issue beating the rates of exchange offered elsewhere, and even if you do not require your Australian Dollars for a few months this current gift on the currency markets can actually be fixed in place ahead of any future transfers, to avoid the expected falls as we edge closer to the Referendum.
I will reply personally following the opening of markets tomorrow morning detailing what the expected trends are for the day and whether any peaks may still be expected. Simply detail your requirement, and the best number to reach you on, and we can have a brief conversation in the morning which could save you thousands of Pounds.
Australian Dollar sellers can do the same, and we can have a conversation about how this recent movement has effected any short term plans you may have and how these can be managed.