For the first time recently Sterling has fallen against the Australian Dollar as the positive movement for the Pound seems to have been halted in its tracks. This has provided Australian Dollar sellers with a respite and a good opportunity compared to the last few days.
The Bank of England kept interest rates on hold earlier today which came as no surprise but the central bank has announced a cut in the growth forecast.
The Quarterly Inflation Report suggested that inflation would hit 2.8% whilst average earnings would hit 2% and this caused investors to sell off Sterling which has led to a 2 cent drop from the high to low between the Pound and the Australian Dollar.
We end the week with some Chinese data overnight and arguably more importantly US inflation data tomorrow afternoon.
With the US economy having been struggling with growth recently it will be interesting to see what happens with with tomorrow’s release. In recent weeks the negative data in the US has shown problems for commodity based currencies and this is why we have seen such a large movement in Sterling’s favour vs the Australian Dollar.
The other reason for Sterling’s gains over the last month is that things are looking more politically stable in the UK with the Conservatives appearing to be unchallenged at the moment. The stability of having another term of the same government has helped to strengthen the Pound vs the Australian Dollar.
Although today the Pound has fallen vs the Australian Dollar I think we could see the Pound challenge 1.80 at some point in the run up to next month’s election.
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Tom Holian [email protected]