RBA left scratching their heads on the problem of the high value Australian Dollar (Daniel Johnson)

AUD to GBP: UK Vaccine Push Boosts Sterling

GBP/AUD Forecast

The Australian Dollar has been rising in value consistently and is causing a problem for the Reserve Bank of Australia (RBA). The new governor of the RBA, Philip Lowe recently made it clear that interest rate cuts were off the cards for the time being, interest rate cuts are the best method at weakening a currency. Current data shows the Australian economy is currently looking strong.

The housing market is booming with people attracted to areas offering high wages such as Melbourne and Sydney. An interest rate cut would act as a catalyst to the emerging housing bubble conundrum.

Australia requires a weaker currency to keep the price of it’s raw materials down in order to continue their appeal to their biggest importer, China. The RBA seem reluctant to make any monetary policy changes to weaken the Aussie, especially considering the last rate cut had little impact on Australian Dollar value.

Add into the equation the small matter of Brexit and the pound could have further room to fall. The market never moves in one direction however and there will be opportunities to but AUD short term although they will be difficult to take advantage of.

What could cause movement on GBP/AUD short term?

Keep an eye on Australian unemployment data coming in through the early hours of Thursday. If data comes in against the grain we could see an opportunity for Aussie buyers.

UK Retail sales are in at 09.30am tomorrow and could well cause swings as these will be a key indicator as to the health of the UK economy following the vote to leave the EU.

Theresa May will also be speaking at the European summit tomorrow and Friday where she will be grilled on her EU exit strategy which could cause major volatility for the pound.

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