The Reserve Bank of Australia has once again signalled that things are not looking in great shape for the Australian economy owing to higher unemployment levels combined with lower inflation if UK house prices continue to fall.
Indeed, according to some reports there has been a drop of almost 60% in investment from foreign buyers in to the property market in Australia.
Up until last year Australian house prices had been rising significantly but both Sydney and Melbourne which were leading the market in terms of house price growth have both started to feel the effects and have started to drop during the last 18 months.
With a lot of wealth for Australians tied up in their houses the fall in value is clearly a concern for the central bank as this could trigger a fall in consumer spending and then cause GDP to fall.
At the moment Australian interest rates are at their lowest levels in over 50 years and there appears to be little appetite to consider raising interest rates any time soon.
Indeed, if anything the expectation is for the Reserve Bank of Australia to look at cutting interest rates during 2019 and this is one of the main reasons for the weakness in the value of the Australian Dollar against the Pound.
In the meantime the Australian Dollar is also feeling the pressure owing to the ongoing Trade War issues between the US and China.
China is Australia’s largest trading partner so any signs of a slowdown in growth or reduced demand will often have a negative impact on the value of the Australian Dollar and this is another reason why the GBPAUD exchange rate has been trading around the 1.80 level recently.
Relations between the two superpowers appear to have stalled once again and hopes are that a deal covering Chinese goods coming in to the US will be resolved before the deadline of 1st March.
Both sides are hoping that a resolution can be found but we are less than 2 weeks to go before the proposed deadline and this could negatively impact the value of the Australian Dollar which is good news for anyone looking to buy Australian Dollars in the next fortnight.
If you would like a free quote when buying or selling Australian Dollars and would like to save money on exchange rates compared to using your own bank then contact me directly and I look forward to hearing from you.
Tom Holian [email protected]