The Reserve Bank of Australia cut interest rates this week to its lowest level in history at 1%. As it was widely expected the markets priced in the rate cut so the value of the Australian Dollar did not feel too much of an impact.
The RBA also hinted that it may be prepared to cut interest rates even further. Since June the RBA has cut rates by 0.5% and so I think the RBA may be tempted to adopt a wait and see approach before changing monetary policy once again.
With the markets expecting interest rates to be cut to 0.75% the GBPAUD exchange rate did not move too much as there was little reason to sell the Australian Dollar.
RBA governor Philip Lowe is due to be speaking on Tuesday and his speech should provide further clues as to when they may make further changes to policy.
Therefore, if you’re in the process of converting Australian Dollars then make sure you pay close attention to Lowe’s speech next week.
The Australian Dollar also improved during the course of this week owing to the latest trade surplus figures on Wednesday. The increase in the goods and services surplus came about owing to the increase in the export market in May.
The other good news came from the Australian housing market as building approvals increased. Although house prices have fallen in recent times down under, the increase in building approvals should be taken as a positive as it means there is an appetite for making money once again in the property market.
Whilst the UK continues to struggle with the uncertainty caused by Brexit and the leadership election I think we could see further improvements in the value of the Australian Dollar.
If you would like to save money on exchange rates when buying or selling Australian Dollars and Sterling then contact me directly for a free quote and I look forward to hearing from you.
Tom Holian [email protected]