Australian Dollar still at 3-year highs against the Pound

Any clients selling Australian Dollars to buy Pounds are currently seeing some of the best levels to do so in three years and a fantastic opportunity to take advantage of. We started to see some of the Aussie’s gains reversed during yesterday’s trading, with jobs figures overnight on Wednesday showed a decline. There are fears in Australia that there are some deep underlying issues within the jobs market, with a shift to offering part-time jobs from employers. There were also reports yesterday that there could be a slowdown in future property developments to curb a potential housing bubble, and this could see 200,000 jobs lost as a result.

As a result of the data we saw the Pound gain considerably against the Dollar, as there is a feeling in the market now that there could be an interest rate cut in the not too distant future from the Reserve Bank of Australia. With this in mind, any clients with an AUD requirement should keep a close watch on inflation figures on Wednesday next week.

Will the RBA cut interest rates?

Inflation has been worrying low in Australia of late, so the RBA will be watching this carefully before making a decision on whether or not to cut interest rates further. The recently appointed head of the RBA, Philip Lowe, made his first speech recently and was very bullish regarding the state of the economy, claiming that our central forecast remains that inflation in Australia will gradually pick up over the next couple of years, although it is still likely to be closer to 2 per cent than 3 per cent. This would suggest that an interest rate cut in the near term is unlikely, but if jobs figures and inflation continue to disappoint, the RBA may be forced to act.

With AUD levels so close to 3-year highs, should AUD sellers move now to take advantage? It has been rare over the past 3 years to experience such a long period of rates below 1.70, and with underlying fears over the Australian economy, moving sooner rather than later to sell AUD may be a sensible move.

For more information on how future data releases could affect a Australian Dollar (AUD) exchange, call our trading floor on 01494 725 353 or email me at rjh@currencies.co.uk.

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