Jonathan Watson
Associate Director
Australian dollar may weaken further
The Reserve Bank of Australia seems likely to keep interest rates on hold. How will this affect the Australian dollar?
Request a quoteInterest rates generally strengthen the currency concerned and the lack of any major improvements in the Australian economy seems likely to keep the Reserve Bank of Australia on hold when they meet tomorrow to review Australian interest rates.
| Currency Pair | % Change in 3 months | Difference on £200,000 | |
|---|---|---|---|
 GBP |  AUD | 7.97% | $27,634 AUD |
Retail Sales disappointed in October and September, this could be a worrying sign as it is well known that Australian consumers are some of the most indebted in the World.
The Aussie has been stronger against many currencies but that has been more down to global factors, namely the prospect of an end to the Trade Wars helping to improve confidence.
Trade Wars fears soothed for now
The Australian economy is closely linked to the performance of the Chinese economy which has been concerning investors because of the Trade Wars. The outlook on this topic remains uncertain but the market will closely monitor the effects from Trade Wars.
Recent reports have suggested Donald Trump will be looking to work a deal with China on the issue which will help ease tensions.
It will be interesting to see how the RBA read these signs alongside the recent economic data, it may have boosted confidence for the RBA, which might help the Australian currency to strengthen.
GBP/AUD rates back over 1.80
The pound to Australian dollar rate has been very volatile in recent weeks, reflecting the volatile nature of the main issues driving the pair, Brexit and Trade Wars.
This week is predicted to see some progress on Brexit with Theresa May apparently close to finalising a deal on the UK’s exit terms. There is a key Cabinet meeting due tomorrow and apparently we could expect progress on the all-important Irish border problem.
The Reserve Bank of Australia's interest rate decision will be of large importance, as will the US Mid-Term elections and their interest rate decision on Thursday.
GBP/AUD rates might well settle above 1.80 but any deviation in the positivity for sterling or significant changes in global market sentiments, could easily change the course.
If you have position to buy or sell AUD for sterling this week or in the weeks ahead, please do get in touch.
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