The Australian dollar had been strengthening consistently against the pound, gaining by almost 9 cents in the last three weeks. To put this into monetary terms, a £200,000 purchase became over $16,800 cheaper if timed yesterday compared to three weeks ago, and yesterday’s highs provided clients with the best opportunity to transfer Australian dollars into pounds in just over 2 months.

Currency Pair% Change in 1 monthDifference on £200,000

Although the majority of this recent strength had been mostly due to Brexit uncertainty and the weakening pound, yesterday’s Australian dollar strength can be put down to Donald Trump’s comments in an interview to Fox News suggesting that he and Chinese President Xi Jinping would meet next month at the G20 summit in Buenos Aires, and that a deal to end the trade war could be reached.

As China is Australia’s largest trade partner, the Australian economy and therefore the value of the Australian dollar had been heavily impacted by the uncertainty caused by the trade war between the world’s two largest economies. Although a deal isn’t certain, some of the pressure was lifted and therefore boosted investor confidence in the Aussie too.

RBA latest interest rate decision

Poor Australian Inflation figures released overnight

Overnight last night, Australian Inflation figures for the third quarter were released and provided another gloomy outlook for the Australian economy. Consumer Price Index figures fell to 1.9% from 2.1% in the previous year to September.

Inflation is a key barometer of the health of an economy, and plays a large part in deciding future monetary policy changes by Central Banks. The Reserve Bank of Australia has kept Interest Rates on hold at 1.5% for two years now, falling behind many other economies including the US which continue to raise Interest Rates, making them a more attractive investment providing greater returns.

This news isn't likely to give the RBA the confidence it needs in the economy to be able to warrant a hike in Interest Rates any time soon.

As such, the Australian dollar has weakened this morning against its major currency counterparts, although at the time of writing this GBP/AUD still remains close to the 2 month lows previously mentioned. However, clients with a short term Australian dollar purchase requirement could benefit from getting in touch this morning to capitalise on last night’s gains.

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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.