Buying the Australian Dollar has been becoming cheaper and cheaper over the last 7 days. It is now almost 10 cents cheaper to buy making a £200,000 transfer currently gets you over AUD $21,000 more compared to just 2 weeks ago.
The reason for this climb in value has been down to AUD weakness rather than any real GBP strength. This came from the news over the weekend when the Reserve Bank of Australia cut their interest rates after a continual struggle with domestic growth and inflation. They cut rates by 0.25% to a low of 1.75% causing AUD weakness. Plus we also had their latest budget announced with further cuts which the market are not fans of. Rates are now at the highest levels that we have seen since the middle of February.
China has continued to look weak but this has not had the normal impact on the value of the Australian Dollar. . It would appear that the rate cut by the bank has had the desired impact on the market value, as a net exporter the central bank would want their currency to be cheaper to buy to boost exports in their economy.
Moving forward I would not be too surprised if we see further weakness for the AUD making it cheaper to buy still. The uncertainty there will probably intensify as they move closer to an election later this summer. Remembering that any political uncertainty has a negative impact on that currency, making the AUD probably cheaper to buy.
So yes, I would not be surprised if we saw GBPAUD rates higher still, maybe even chasing down the huge emotion barrier of 2.0 over the next 6 weeks.
If you are a AUD seller these comments should be seen as a warning – please don’t just assume that this movement recently is a knee jerk and that the market will move back to where it was as quickly.
If you would like to discuss the above in more details, put forward a question or indeed look at live prices please feel free to contact myself directly – firstname.lastname@example.org