Sterling strengthens against the Australian Dollar following European banking stress tests (Tom Holian)

AUD to GBP Rate: Australian Dollar Lower Against the Pound Despite Better-Than-Expected Employment Numbers

We have seen huge gains for the Pound vs the Australian Dollar following the release of the European Banking Authority’s stress tests released last last night.

Sterling jumped against all major currencies following the news as out of the 51 European banks reviewed all 4 British banks came up favourably.

They all demonstrated that they would have enough capital buffers in the event of a global slowdown and conditions similar to that of the credit crunch era.

The banks at most risk were those in Italy including Monte dei Paschi di Siena which showed that they would risk not being able to pay back as much as 14% of the current debt which stands at EUR550bn of which almost half is owed to French banks.

Confidence in the Pound very quickly increased on the back of the news and with the banking industry in the UK so vital to the health of the British economy we have seen big gains for Sterling vs the Australian Dollar.

However, as we enter next week there are two big announcements which could both cause huge volatility for GBPAUD exchange rates.

On Tuesday the Reserve Bank of Australia is due to release their latest interest rate decision and are anticipated to implement an interest rate cut following lower than expected inflation data published recently. Typically an interest rate cut weakens the currency involved.

However, on Thursday the Bank of England hold their own meeting and there is a high chance of either an interest rate cut or further Quantitative Easing or even both which could cause problems for Sterling.

Either way next week is expected to be rather volatile so if you have a pending currency requirement it is important to be following what happens to GBPAUD exchange rates next week.

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 teh@currencies.co.uk

I look forward to hearing from you.