After hitting the best level to buy Australian Dollars with Pounds since the Brexit vote back in June 2016 the Pound has plummeted this morning after UK GDP figures came out worse than expected with the economy growing at its slowest rate in 6 years.
GDP fell to 0.1% which was lower than the expectation and showed a fall compared to the previous quarter which was 0.4%. This has now decreased the chances of an interest rate hike at next month’s Bank of England meeting due to take place on 10th May. In the last fortnight the chances were as high as 85% of a rate hike coming next month as average earnings outpaced inflation for the first time in a long time.
However, as the Bank of England are responsible for changing policy to help with both inflation and growth this poor data release has almost put paid to a rate hike at next month’s meeting and this has seen 2 cents wiped off the value of a GBPAUD trade of the difference of £1,250 on a currency transfer of AUD$200,000.
With the UK economy growing at its slowest pace since 2012 manufacturing and construction were two of the big casualties during the first quarter of this year.
Although the weather was poor and unusually cold during the first part of the year many economists have suggested that this was not too much of a factor.
We could see even further movement on the currency markets later on this afternoon when US GDP data is released at 130pm UK time. As the world’s leading economy, the announcement will often affect global attitude to risk so if you’re in the market looking to make a trade then this could be very influential for GBPAUD exchange rates.
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