The pound has slipped below the 1.70 mark we briefly touched as investors initial excitement at the prospect of a UK interest rate hike begins to fade. The pound soared last week breaking the 1.70 mark but this was not sustainable, the Australian dollar has been much weaker too but we have seen it regain some strength back too. With almost 5 cents improvements from the worst rates in a very short space of time there are some very good arguments for buying Australian dollars with pounds at present, however there is more important news this week that could influence the rates.
A more optimistic tone from the Reserve Bank of Australia’s Minutes released this week also predicted two hikes in 2018 and talked of the recent highs in Iron Ore prices, all positive news that has helped the Aussie. This is all in contrast to last week when a board member Harper stated he felt that there was little the RBA could do and that the main driver on the AUD was movements on the US dollar.
Big news this week will be the US Federal Reserve Interest rate decision this evening. There is a very strong relationship between the US dollar and the Australian dollar, investors will essentially look to capitalise on the stronger interest rates in Australia but with the US also on a path to raising their own interest rates we could easily see big swings.
Governor Philip Lowe is also due to speak tomorrow and his comments will be watched closely for signs of how he views the possibility of raising interest rates. Friday we have a very important speech from Theresa May in Florence on Brexit which could really see the pound stronger if as expected she indicates a commitment to paying some form of Brexit bill.
GBPAUD is much improved and may well rise higher but it would be a shame for Aussie buyers to miss out on the current much higher rates. If you have a transfer to make and wish to get some extra information to help make a decision on an exchange please contact me Jonathan watson by emailing [email protected].