Sterling Under Pressure Following BoE Interest Rate Cut (Matthew Vassallo)

AUDGBP: Australian GDP Disappoints, AUD Weakness

Sterling has come under further pressure over recent days, following last week’s decision by the Bank of England (BoE) to cut interest rates to a record low of 0.25%. Despite the outcome being widely anticipated, investors had not factored in the full extent of a cut and as such the Pound lost value against the AUD, with rates testing 1.70 during today’s trading.

The Pound is likely to find life tough going for the foreseeable future but this does not necessarily mean that rates will head solely in a negative direction, for those clients holding GBP. The Australian economy has problems if its own and despite a recent improvement, current inflation levels along with weak growth forecasts and concerns over China, will not help any further AUD advances. We also have to consider the Reserve Bank of Australia’s (RBA) stance, which has been to actively keep the AUD’s value in check over recent years, in order to boost exports and they have given no indication this stance has changed.

Personally I do feel it will be extremely difficult for the Pound to make any sustained improvement back above 1.80 under current conditions. Once the downturn from the UK’s decision to leave the EU starts to dissipate and we get more of an understanding about how and when the UK will facilitate our Brexit, then the Pound may react more positively. However, for the time being I would be keen to project any Sterling positions and take advantage of the huge improvement seen for those clients holding AUD.

If you have an upcoming GBP or AUD currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask for Matt. Alternatively, I can be emailed directly on mtv@currencies.co.uk