RBA cuts interest rates causing Australian Dollar weakness vs Sterling (Tom Holian)

AUD GBP Steady Above 0.5400 with Melbourne Reopening

The Reserve Bank of Australia finally succumbed to pressure and decided to cut interest rates by 0.25% to 1.75%.

The strength of the Australian Dollar seen over the last few months alongside the low Australian inflation data finally forced the hand of the central bank to cut interest rates.

This has seen GBPAUD exchange rates improve to the same levels as seen in late February creating a welcome boost for anyone looking to buy Australian Dollars with Sterling.

I have been saying for quite some time that an interest rate cut is necessary and I don’t expect this to be the end of the interest rate cutting cycle which could result in even further weakness for the Australian Dollar.

Later this week there are quite a few data releases due out in Australia including New Home Sales and Retail Sales data which could see GBPAUD rates go in an upwards direction if the economic data is lower than expected.

The Chinese also release Services data on Thursday and with GDP having fallen to its lowest level in China for many years any further negative data could see GBPAUD rates improve.

Overall my expectation for the week is for Sterling strength vs the Australian Dollar. Good news for anyone looking to buy Australian Dollars.

However, the EU referendum is due is just less than 2 months and at the moment with the polls too close for comfort on whether or not the UK will stay in the European Union this could cause volatility for Sterling exchange rates during this period.

There is an option of buying a forward contract which allows you to fix an exchange rate for the future which will eliminate the uncertainty of where markets will be in the future.

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]