The pound to Australian dollar exchange rate has weakened despite an interest rate cut from the Reserve Bank of Australia last night. The RBA have cut interest rates from 1.25% down to 1% as concerns over a global slowdown and a downturn in Australia continue to influence the central bank’s decision making. The cut last night had been largely priced into the markets and there hasn’t been a major market reaction to the news.
The pound is nonetheless weaker against the Australian dollar although this is more likely to do with the truce between the US and China which will stop further trade tariffs being applied. There is a better opportunity to convert Australian dollars into pounds on the back of these recent developments. This may not last as there are reservations that the issue of the US China trade war will be resolved. The RBA may or may not wish to cut interest rates again and this topic is likely to generate much discussion. The US Federal Reserve are also expected to cut interest rates this month and this could have a far reaching impact on the Australian dollar. There has been talk of a US interest rate cut of 50 basis points which would be more extreme in approach than we have seen in recent years.
Brexit meanwhile continues to be the main driver for sterling exchange rates and the GBP to AUD pair is likely to see a volatile few months ahead of the latest deadline of 31st October 2019. The Conservative leadership battle continues between Jeremy Hunt and Boris Johnson both of who are pushing to deliver on Brexit. Boris Johnson however has been more forthright having stated that Britain will leave the EU by this date, come what may, do or die.
The prospect of a no deal outcome is now becoming a credible proposition and this has been reflected in the price of sterling across the board after Theresa May resigned as Prime Minister. Those with pending currency requirements either buying or selling Australian dollars would be wise to plan around these important events.
For morte information on the Australian dollar and for assistance in moving funds then please get in touch with me James at [email protected]