Will the Pound continue to get stronger against the Australian Dollar? (Joshua Privett)

GBP to AUD Steady as Markets Consider BoE and RBA Rate Cuts

Since the beginning of last week the Pound has been enjoying a strengthening trend against all currency pairings, including the Australian Dollar. Like the effects of the Brexit on the Pound, the momentum from this comes from politics.

Last Monday it was announced that a two-month leadership contest for a new Prime Minister in the UK will be avoided, and clearly markets were impressed by the quick turnaround. By Friday a new Prime Minister had been sworn in, a new government formed, and a new Ministerial position created to manage the UK’s exit from the EU, but in a gradual manner.

All the above served to make the Pound stronger, with markets realizing that there is now a buffer which will allow them to act with some degree of normality in the UK until next year.

However, the positive news on the Pound has been muted against the Australian Dollar, which is enjoying higher demand, both for its currency and in its stock markets.

With an interest rate over there of 1.75%, which for Australia is deemed ‘historically low’, but compared to the UK, which is flirting with lowering theirs to 0.25%, the disparity in demand between the two is understandable.

Economics is also playing some part. This morning produced a mixed bag for the UK, with a dramatic reduction in public borrowing, but also an equally dramatic fall in retail sales figures for the UK. It seems that despite the seasonal weather, families saving for the summer months have kept wallets closed and reduced spending activity for the UK and hurt the Pound’s value in doing so.

So for the past few days rates have largely been in limbo. There are a number of political forks in the road which may affect the value of the Pound. Will the Scottish call for another Referendum? How will trade negotiations go? Will more countries such as Australia welcome the ability to create a trade deal with the UK? So watch this space.

To remove all risk, whether buying or selling Australian Dollars, moving sooner rather than later secures a rate of exchange you are either happy with for buying Australian Dollars, or more likely selling. The current trend seems to be a stabilizing one on the Pound.

If you would like to discuss the options open to you for your transfer, to explore current GBP/AUD forecasts in further detail, or simply to hear a live, competitive quote, I can be reached on +44 1494 787 478 – ask a member of my team for Joshua.

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