GBP AUD Exchange rates are back up over 1.75 again for this pair creating a good opportunity for those clients looking to buy Australian dollars. The Aussie dollar has come under pressure of late for a number of reasons. The dovish commentary from the Reserve Bank of Australia means that although the next interest rate movement is more likely to be up rather than down the timing of a rate hike will probably not be until the end of 2018. The other factor putting pressure on the Aussie stems from what is happening in the US.
The US Fed are looking to raise interest rates in December although there have been renewed concerns over weak inflation and more importantly weak wage growth, something that has become an issue for many of the major economies. As interest rates in the US go up taking rates higher than what are currently available down under this has the effect of helping drive up the US dollar whilst weakening the Australian dollar. With the US looking to continue raising rates another 2-3 times in 2018 as things stand then the Australian dollar could find itself under considerable pressure in the New Year.
Clients looking to buy or sell Australian dollars should pay particular attention to the EU summit in the middle of December as this is where the pound should see new direction. Should the Brexit stalemate be overcome then the pound could rally materially although the risk remains of a no deal scenario.
UK banking stress test released this morning have highlighted the banks are strong enough to withstand a severe stress test scenario in a sign of strength for the banking sector. More importantly the Governor of the bank of England has said that bank will continue to support the economy in the event of a disorderly Brexit.
For more information on the Australian dollar and how these key upcoming events have a direct impact on the rates of exchange and how to maximise on the opportunities as they happen then feel free to get in touch with me James at [email protected]