RBA Minutes Released Overnight Could be Key! (Matthew Vassallo)

Pound Pushes Higher Against the Australian Dollar on Recent Economic Divergence

GBP/AUD rates have remained fairly flat of late, with the Pound struggling to realign following the heavy losses we’ve seen since the turn of the year. Personally I now feel that the Pound will struggle to break back through 1.90 in the short-term and the days of trading above 2 are now behind us for the foreseeable future, unless there is a major shift in market conditions.

There is a host of key economic data out this week, so we may well see additional volatility on the exchange. Any clients with a AUD requirement will be interested to see the market reaction to the latest Reserve Bank of Australia (RBA) minutes, which are released overnight in Australia. These will give investors a key insight into the relative health of the Australian economy and it could even provide us with an indication of future growth forecasts and economic predictions, which will be used as a benchmark by investors.

From the UK’s standpoint it is likely to be Tuesdays employment data, including the official unemployment rate and Wednesday’s Retail Sales figures, which are likely to be this week’s biggest market movers. Clients should watch out for any figures which come outside of their predictions, as this will cause the most amount of movement on the exchange, with retail Sales figures another key barometer of an economies wellbeing.

As mentioned the general trend of late has been Sterling weakness, and with the pair falling again last week many clients are now questioning whether the AUD will make a move under 1.80? Whilst I certainly feel the Pound will continue to struggle against a wave of market negativity stemming from the EU referendum in June and a possible Brexit, I am cautious when it comes to assuming that the AUD has enough behind it to really kick on. The Chinese economy is still fighting against a negative downturn and due to Australia’s heavy reliance on the export of their raw materials, they are heavily reliant on a booming Chinese economy. Further problems here could cause the Reserve Bank of Australia (RBA) to act and cut interest rates again, a move that would surely cause the AUD to lose value. Therefore, I would be looking to take advantage of the huge spike we’ve seen since the turn of the year and not gamble on what is still a very fragile economy.

If you have an upcoming GBP or AUD currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on mtv@currencies.co.uk