GBP/AUD currently sits at the lowest levels for AUD buyers since September 2014. Brexit is taking it’s toll on the Pound. Bank of England (BOE) Governor, Mark Carney spoke yesterday during a stability report. He stated there is £150bn ready for quantitative easing (QE). QE is essentially pumping money into an economy in a an attempt to stimulate growth. He also said there is the likelihood of a rate cut from 0.5% to 0.25% which could take place as early as next week. If this does not occur, expect the rate drop to occur at the next monetary policy committee meeting in August.
This is already being factored into GBP/AUD, currently sat in the 1.73s. I think there is the potential for further a further drop. We currently have a hung parliament after the Australian General Election. Parties will have thirteen days for a government to be formed. Historically during times political uncertainty the currency in question will weaken. However, this goes to show how much Brexit has effected the Pound. The Aussie should be weakening, but it is continuing to strengthen against the Pound. Once a government comes into place I expect further movement in favour of AUD.
It is important to note that there is a strong possibility the Reserve Bank of Australia (RBA) will also cut interest rates. This week they have been held at 1.75%, but I feel this decision was only taken as there is no government in place. There could well be a cut next month. With the Aussie currently looking strong against the majority of major currency pairings I would say the RBA may take action in order to make Australia’s raw material exports more appealing.
Volatility is assured.
If you have a currency requirement it is vital to be in touch with an experienced broker. Timing your trade is key during such volatile times, If you have a good broker on board he can keep you up to date with what is happening in the market to help you make an informed decision. If you would like me to assist with your trade I will be happy to help. Let me know the currency pair you are trading, volume and time scale and I will provide a free trading strategy to suit your needs. I work for one of the top brokerages in the UK and as such I am in a position to beat nearly every competitors rate of exchange. You would be looking at around a 4% saving in comparison to high street banks. Please do get in touch by contacting me at [email protected]. Thank you for reading my blog and I look forward to hearing from you.