The Australian dollar has made some quite impressive gains of late against the pound due to several contributing factors
|Currency Pair||% Change (Month)||Difference on £200,000|
There has been a recent interest rate cut from the Reserve Bank of Australia (RBA) to 1% and despite rumours circulating that the RBA could make further cuts the RBA have held off for the moment which has boosted investor confidence.
There is also the situation in the UK which has weakened sterling against the Australian dollar. With no PM and a relatively high probability of a no deal Brexit, Sterling seems destined to remain fragile short to medium term.
There is also the tentative truce that was put in place between the US and China in their ongoing trade war. There were some who believed that the trade war could be close to a conclusion, but there have been similar situations in the trade war before, only for further tariff escalations to occur.
With Australia’s heavy reliance on China purchasing its exports it may be wise to keep an idea as the trade war develops as this is likely to have ramifications on the value of the Australian dollar. Despite the GBP/AUD interbank rate breaching the key resistance point of 1.80 the slowdown in Chinese growth is significant. Chinese growth has now dropped to a 27 year low of 6.2%. If the trade war escalates this has the potential to impact AUD.
Tomorrow we will witness the release of Australian unemployment. Unemployment is a key factor in monetary policy decisions and considering the current situation with the RBA on interest rates this release will be watched keenly by investors. There is expected to be little change on previous data and they are meant to land the same as previously at 5.2%. If the figures deviate from expectations we could potentially see fluctuations in Australian dollar value.
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