Pound to Australian Dollar exchange rates were attacked from multiple fronts this week, with surprise from China, and dismay from the UK igniting a rally against the Pound to four week lows against the Australian Dollar.
The Chinese news was a surprisingly positive look to the health of spending activity for the economy as a whole. Due to Australia’s close trading relationship with China, any news of high Chinese spending feeds expectations of rewards for Australian exporters. As a net exporter, the value of its currency immediatly soars off the back of any developments in this vein.
In this case, extremely positive news meant that confidence in the Australian economy soared in the very early hours of Tuesday morning in the UK, with the resulting boost on the Australian Dollar against the Pound driving GBP/AUD back down to 1.61.
Coupled with what has been a poor week for UK inflation and retail sales data, the Australian Dollar has been the currency of choice for many investors, and this means anyone holding Australian Dollars has enjoyed daily improvements to the value of their capital.
Where will Pound to Australian Dollar rates go from here?
A major point which analysts have continually highlighted towards the end of this week is that we have been at this point multiple times since September. In October rates were around this level, before a mammoth rally in November and December. Then a speedbump in January saw repeat movements to these levels, again gradually, before a much more rapid improvement back towards mid-to-high 1.60’s on GBP/AUD.
Since this has become such an insistent ‘resistance level’, the tendancy is for markets to shift their capital back into Sterling since there is low expectation for the Pound to continue to get cheaper. As such it may be wise for Australian Dollar to Pound exchangers to move quickly, to avoid being last to the party with rates as they are.
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