GBPAUD rates rise on rate cut but could fall below 1.70 very easily!

Commodity Based Currency AUD Struggles During Global Uncertainty

The RBA has cut interest rates to a low of 1.5% triggering a slide in the Aussie that wasn’t wholly unexpected. The move was nowhere near as bad as it could have been and this is mainly because the cut was expected. If you have a currency requirement involving buying or selling the Australian dollar and pound this week is a very important one with the Bank of England Interest Rate decision due on Thursday. Most forecasters expect the BoE to cut interest rates too but there is wide scope for a variety of other measures including the expansion of the Quantitative Easing program or even the revival of the Funding for Lending program.

The impact of both measures was to increase the money supply which had also helped to weaken the currency. Expectations for the rate to fall are high which could easily disappoint like last month but whereas the scope for disappointment was higher last time the window of disappointment seems much slimmer this time. Were the Bank of England to disappoint they would lose a large degree of credibility – it is interesting that they hinted last time they would cut and they didn’t. Could they disappoint again? I am very doubtful they would and as such I expect the pound to lose value and looking at the data of late it wouldn’t be surprising to see some QE down the line.

GBPAUD could easily drop below 1.70 depending on what the BoE suggests this week, if you have a transfer to consider involving buying or selling the Australian dollar or pound then making some plans in advance is very sensible. My name is Jonathan Watson and I would be very interested to hear just how any plans you might have to buy or sell currency are heading. I am very confident I can offer some useful information which will help you in any decision making. Please email me on jmw@currencies.co.uk