The pound has made some positive gains during the early part of this month, with GBPAUD exchange rates breaking past 1.83 for the first time since mid-September.
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With the US Federal Reserve increasing interest rates for the 8th time since December 2015, the difference between the rate available in the US to Australia is 0.75% which is the largest difference since the Australian dollar was introduced over thirty years ago.
The Reserve Bank of Australia confirmed that they were keeping interest rates on hold earlier this week which led to the Australian dollar weakening against a number of different currencies including the pound.
The current market expectation is that the US will hike interest rates once more before the end of the year. This is causing a big sell off of Australian dollars and is one of the reasons for the weakness in the Australian dollar at the moment.
As China is Australia's largest trading partner, whatever happens in the world’s leading economy will often have an impact on the value of the Australian dollar.
Clearly the ongoing Trade Wars and increased tariffs have not been favourable for the Australian dollar, and things between the US and China could be getting worse.
The US Vice-President Mike Pence claimed in a speech yesterday that China appears to be causing problems in the South China Sea after a near collision between US and Chinese military ships and relationships appear to be fraught at the moment.
The US have already placed $200bn in tariffs on Chinese goods and although Australian steel and aluminium has not been affected the tariffs could cause problems for the Australian economy which is heavily reliant on Chinese demand for Australian goods and services.
The value of Sterling versus the Australian Dollar is likely to be affected by Brexit talks, so if you’re buying Australian dollars and are concerned about what may happen when the EU summit takes place on October 18th it may be worth getting something organised in the next two weeks.
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