This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The below table shows the difference in AUD you would have achieved when buying £200,000.00 over the past week.

Currency Pair% ChangeDifference on £200,000
GBPAUD5.78%$18,415 AUD
RBA Decision Next week

Best time in 3 months to buy Australian dollars

It is currently the best time in 3 months to buy Australian dollars with pounds as the prospect of a UK rate hike helps sterling. The lack of any hikes down under has also helped the pair by weakening the Aussie too.

Last week board member of the Reserve Bank of Australia Harper had said that there is no real case for hiking interest rates as there was lots of spare capacity in the economy. In an interview, he was quite flippant saying that it didn’t really matter what the RBA does, the strength of the Aussie is mainly down to the weaker US dollar. When you have such a senior member of the RBA stating such facts it really does underline how much the Aussie is at the mercy of global events.

Essentially the Australian dollar is used by investors because of its higher interest rate. With the base rate in Australia at 1.5% investors will invest for a higher return. The trend and relationship with the US dollar is vital since the US dollar has appreciated massively in the last year as markets believed the Fed would be raising interest rates multiple times this year.

Whilst they have been raising rates concerns over just how many times in the future they will do again have seen a big swing on USDAUD rates. This move then weighs the Aussie down against other currencies like the pound.

Wednesday is therefore a key date for GBPAUD exchange rates since the Federal Reserve meet in the UK to discuss their latest interest rate meeting. Any big movements on the US dollar could see some unexpected swings on GBPAUD too.

RBA Minutes will be key to the GBPAUD rate this week

Before this big news on Wednesday, domestic events in Australia could be interesting. On Tuesday evening, there is the Reserve Bank of Australia (RBA) Minutes where we will learn of the latest attitudes from the RBA on raising rates.

With Governor Lowe, who is the highest ranking official in the RBA also due to give a speech there is plenty of opportunity for movement on the GBPAUD rate this week. Lowe will give a speech on Thursday at the American Chamber of Commerce in Perth. Global events always remain a risk to the Australian dollar, Chinese economic uncertainty and North Korea could all act as triggers to volatility on the GBPAUD.

Overall the pound could rise further against the Australian dollar but with so much uncertainty about where Brexit is ultimately going to take the UK and Theresa May giving a very important speech on Friday in Florence, Italy. If you need to buy Australian dollars locking in on the current improvements could well be worth the effort.

Thank you for reading today’s market report, please feel free to get in touch if you have any questions about an upcoming transfer. Feel free to e-mail me at jmw@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.