Sterling Rallies Against the AUD – Will the BoE Hike Interest Rates? (Matthew Vassallo)

AUD GBP Flat as Market Awaits Key Economic Data

The Pound has rallied against all the major currencies, including the AUD, following comments last week from the Bank of England (BoE) regarding a prospective interest rate hike.

With November touted as a possible timeline for this, the markets reacted positively with GBP moving above 1.70 against the AUD.

The AUD has found some support over the past 24 hours, moving back below this threshold but the gloom around the UK economy has lifted slightly following last week’s announcement.

Personally, I would be wary about taking the prospective rate rise as a given, as it was only last month that BoE governor Mark Carney stated that the central bank would not be raising rates whilst Brexit negotiations were on-going. The reasoning behind this was due to the huge amount of uncertainty currently surrounding the UK economy and its future prospects following our separation from the EU.

Rising inflation levels are the potential trigger behind this change in stance but I’m still not fully convinced that the BoE will act unless absolutely necessary.

Any clients holding Sterling should be looking for short-term opportunities, rather than gamble on longer-term sustainable gains and as such the current market price looks appealing.

Looking at the Australian economy and last night’s Reserve Bank of Australia (RBA) minutes suggested s steady increase in the jobs market. Despite an upturn in this sector wage growth and household debt remain a concern. Therefore, all signs point towards the RBA leaving their base rate of 1.5% on hold for the foreseeable future.

Being a commodity based currency the AUD relies heavily on global growth remaining strong and whilst the current climate is pushing investors towards the AUD and its higher yielding interest rates, any slowdown in its export sector will hit the Australian economy hard and the AUD will almost certainly suffer as a result.

A strong AUD relies heavily on the export of Australia’s vast supply of raw materials to China, so any clients looking to buy or sell AUD should have a strong interest in Australia’s monthly trade balance figures.

If you have an upcoming GBP or AUD currency transfer to make you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over eighteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award inning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on [email protected] to find out all the options available to you ahead of your currency transfer.