Increase in Risk Appetite Helps Support the Australian Dollar

GBPAUD rates have risen further as investors concerns over sterling diminish and the market seeks to capitalise on the short term opportunity to buy the pound helping it to rise. GBPAUD exchange rates have risen to the mid 1.70’s helping any clients who need to buy Australian dollars to get a bit more for their money. What happens next is not clear but looking at what has happened these are rather short term measures that have taken place – the reason sterling has benefited has been the removal of uncertainty over who is PM and the lack of activity from the Bank of England. Investors were bracing themselves for an interest rate cut but the Bank of England disappointed markets by keeping rates on hold.

The RBA have now been hinting at rate cuts all of which could help the pound find further strength against the Australian dollar but there is no easy path forward. The Bank of England might still do some QE or Interest rate cuts in August or September which would weaken the pound. The Bank has not really given much clear guidance on this issue, they hinted initially at a cut saying they would do something this ‘summer’ before clearly adopting a more cautious tone of late.

GBPAUD rates could come under some further pressure ion the coming months as investors try to decide who will cut first the Bank of England or the RBA? If you need to make a transfer involving the pound or Australian dollar than making some plans in advance is sensible to try and avoid the disappointment when exchange rates move against you. If you wish to run through or discuss anything relating to the currency markets please feel free to contact me Jonathan Watson on [email protected]