Looming US interest rate decision undermining buying Australian Dollar rates (Joshua Privett)

Commodity Based Currency AUD Struggles During Global Uncertainty

The sentiment surround the upcoming US interest rate decision has changed dramatically in recent weeks, and with this coming at the same time as sudden hints about a further interest rate cut in the UK, the value of the Pound, and therefore buying Australian Dollar rates, are moving and sliding much more heavily than normal.

Whilst not providing a direct impact on views of the Australian or UK economies, the US interest rate decision is a massive event and causes extensive ripples to pervade through the financial world, with currency seeing the largest effects.

Heavy hints made by the Bank of England on Thursday that they may be a further interest rate cut in the UK to manage the fallout from the Brexit below the current record low of 0.25% stunned markets, and led to the surprise sell-off of Sterling which resulted in the sudden fall away from 1.76 to the lower 1.70’s visible today.

The anticipation and uncertainty surrounding the US vote is set to exaggerate this.

The US raised their rates last December to 0.5%, and after months of waiting, pressure is mounting on the FED to raise rates further to 0.75%. Should this happen the Pound will look even less desirable by comparison to the likes of the US Dollar and even the Australian Dollar, which still enjoys 1.5% interest rates on those holding the currency.

Consensus on the market is split. Whilst recent US economic performance data supports the move, the state of the global economy and the lack of certainty on future US direction with a looming election has most banks betting that a hike will wait potentially until the December meeting. The only major banks publicly stating a hike to 0.75% will occur are Barclay and BNP Paribas.

The news does not come out until 7pm UK time so Australian Dollar buyers and sellers still have plenty of time to plan a course of action which will either see any opportunities presented maximised to their full potential on GBP/AUD, or to safeguard an upcoming transfer from the potentially adverse movements which may occur depending on your risk appetite.

I strongly recommend that anyone with a GBP/AUD requirement should contact me to discuss the options open to you to achieve either of the above, and approach what could prove to be one of the most volatile days on the market safely. You can call email me on jjp@currencies.co.uk and I will be able to respond within 15 minutes, or you can fill out the form below.

I have never had an issue beating the rates of exchange offered elsewhere so a brief conversation surrounding your upcoming transfer, alongside the potential for serious exchange rate movements today could save you thousands on an upcoming transfer. I will also point out to new readers of my articles that rates of exchange can be fixed in place as they are today in order to ‘pre-book’ your Australian Dollars or Pounds for a future purchase.

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