RBA Hold Rates and Aussie Weakens (Ben Fletcher)

Pound Pushes Higher Against the Australian Dollar on Recent Economic Divergence

The Reserve Bank of Australia kept rates on hold this morning with the interest rate staying at 1.5%. This was followed by a fall in Aussie strength which took the GBP/AUD rate above 1.70. Whilst this level has been close int he last few weeks the actual market price hasn’t got above this point.

Upward Movement Potential

The Federal Reserve in the United States are going to reveal their latest meeting minutes which will provide an insight into how they plan to re balance the books.

Over the course of the lest 10 years since the financial crisis the FED have bought trillions of bonds to keep US banks afloat, these are now going to be progressively sold off. If the market likes the plan then the USD could start to strengthen. The AUD is considered a more volatile currency and its common place that when the USD starts to strengthen, it results in investors taking funds from riskier currencies such as the AUD.

Therefore in my opinion we may wake up tomorrow morning to the GBP/AUD rate moving into the 1.72/73 region. This would see a return to levels last seen in the first week of June. If you’re looking to purchase Aussie Dollars with Sterling for a short to medium term requirement the mid 1.70’s in my opinion would be a good time to buy. There does appear to be general positive trend with Sterling as we have moved away from the election, but whilst Brexit bubbles away anything could change at a instance. This is why I would encourage acting on spikes as they’re few and far between at the moment.

If you would like to discuss a trade you need to complete either immediately or in the next year please feel free to send me an email. I would be happy to discuss my forecast with you and explain how I may be able to help you achieve the best rates of exchange. Please send me an email to brf@currencies.co.uk with a brief message of what you’re looking to do.