AUD strengthens on positive Exports data

The Pound fell against the Australian Dollar during yesterday’s trading session, as continuing Brexit fears weigh on Sterling’s value. The first set of GDP data for the UK since the vote to leave the EU in June was published at 0.5%, better than the expected 0.3%, and the Pound rose on the back of this positive data. However the gains were short lived and GBP/AUD rates fell by over a cent throughout the afternoon, providing AUD sellers with yet another great opportunity to take advantage of.

Positive Australian exports data was released yesterday, showing the ratio of exports to imports rising for the second quarter in a row, and was the largest gain in 5 years in Q3. Exports rose by 3.5% and imports fell by 1%. A higher ratio of exports to imports is seen as positive because it raises purchasing power and increases GDP and living standards.

Will the RBA cut rates to 1.25%?

Data is light for the remainder of this week and so all eyes will be cast to Tuesday when the RBA will announce their latest Interest Rate decision in the early hours of the morning. Although yesterday’s exports data was positive for the economy, inflation data released on Wednesday showed a fall from 0.5% in June to 0.4% in September, and has meant that the possibility of an interest rate cut is on the cards as this is well below the RBA’s target of 2-3%. There is a possibility that rates will be cut to 1.25%, although economists are divided as to whether that will be at this meeting or in the future. If the RBA do decide to cut interest rates, investors would likely move their money out of the AUD into a higher yielding currency, causing the AUD to weaken. If you are looking to purchase GBP with AUD, it may be wise to move before this announcement to take advantage of the excellent current levels.

Sterling could rally against the Australian Dollar if the RBA decide to cut interest rates on Tuesday. Clients looking to buy Australian Dollars may wish to get in touch with our team on 01494 725 353.


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