The Bank of England have caused a big stir in the foreign exchange markets during today’s session as we have seen a 5-3 split in favour of keeping interest rates on hold.
For the last few months the split has been 7-1 but owing to rapidly rising inflation this is the reason used for the change in the voting pattern.
This vote brings with it a suggestion that interest rates in the UK may be rising sooner than expected and this has helped the Pound to make gains vs the Australian Dollar.
Inflation is now at 2.9% which is close to the highest level in 4 years and with the target set by the Bank of England for 2% this is becoming a problem for the British economy.
With UK Average Earnings falling and inflation rising this is causing the cost of living to go up which is not good news so an interest rate hike could be coming sooner.
I still think this positive jump for the Pound vs the Australian Dollar is short term as the UK has still yet to form a majority government and as yet we do not know when this may happen. When a hung parliament occurred last time it could a total of 20 days before it was sorted.
The other problem that Sterling faces is that of the Brexit negotiations which are officially due to start on Monday and the likelihood at least in the short term is that the talks will be problematic. Therefore, if you’re thinking about buying Australian Dollars it may be worth organising in the near future.
Having worked in the foreign exchange markets since 2003 for one of the UK’s leading currency brokers I am confident not only of being able to offer you better rates of exchange when buying or selling Australian Dollars but also help you with various contract types.
If you would like further information or for a free quote then contact me directly and I look forward to hearing from you.
Tom Holian [email protected]