The Australian dollar has plummeted against most major currencies overnight, as New Zealand surprised the markets and cut interest rates by 0.5%. The RBNZ cut the cash rate to record lows of 1% which now matches the RBA’s interest rate. The cut follows the news this week that US President Donald Trump has told China another 10% tariffs on $300bn of Chinese imports is on the horizon. In addition the President has now stated that China has artificially devalued their currency in a bid to counteract the tariffs.
Forecasts are suggesting that the RBA could continue to cut interest rates early next year, combining that with lower commodity prices such as iron ore, further pressure could be on the horizon for the Australian dollar.
Pound to Australian dollar news
The pound has recovered slightly against the Australian dollar and mid market exchange rates have increased past 1.80, however I am putting this down to Australian dollar weakness not sterling strength. In fact the pound has been losing value against most major currencies this summer due to the ongoing Brexit saga. At present Prime Minister Boris Johnson’s position is that the UK will be leaving the EU without a deal by October, if the EU do no renegotiate.
The spike we have seen for Australian dollar buyers with pounds, should be considered as it looks like a vote of no confidence is on the horizon in the UK once MPs return from their summer break. If this occurs the pound could face another bout of pressure.
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