The RBA's decision to cut rates has created the perfect environment for those looking to purchase AUD. That being said, the RBA members have mixed opinions over a second hike and the Dollar strengthened against most major currencies during yesterday's trading day.
Three weeks ago Consumer Price Index (inflation) level drastically dropped 0.4% to 1.3% which was the final straw for the RBA and interest rates were cut from 2% to 1.75%. GBPAUD has spiked over 14 cents in the last 3 weeks making an AUD400,000 purchase £15,000 cheaper.
Yesterday’s minutes actually provided some relief for Australian Dollar sellers as the Aussie strengthened against all major currencies. The minutes suggested that not all of the members of the RBA were happy to cut interest rates at the last meeting and it’s unlikely that any future cuts are on the horizon.
However Capital Economics’ economist for Australia Paul Dales disagrees with the RBAs minutes and believes by August he expects to see interest rates at 1.5%, Furthermore the Aussie also strengthened yesterday morning off the back of the Asian stock market rallying due to oil prices hitting a six month high.
Going forward the UK’s referendum I believe will heavily weigh down on the Pound therefore I wouldn’t be surprised to see GBPAUD back in the high 1.80s come June 23rd when the UK public decide the UKs fate in regards to EU membership.
As long as the UK stay part of the EU (and I believe this will be the case), and if the RBA make further cuts to interest rates later in the year I expect GBPAUD to be above 2 for the 3rd and 4th quarter of this year.
GBPAUD rates are at a high and those looking to transfer may wish to do so prior to the EU referendum. Call our trading floor on 01494 725 353 or email me here to discuss your requirements.
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