As widely expected the Reserve Bank of Australia kept their base interest rate on hold at 1.5%. GBP/AUD has been holding firm this morning around 1.62-1.63 but what I find more interesting is where the RBA go next.
Suggestions that the RBA would raise interest rates before cutting them again are finding more traction amongst investors and with Sterling likely to remain under pressure I still think GBPAUD movements will favour those selling Australian Dollars for Pounds.
The Australian economy is forecast by the RBA to grow healthily at 3% in the coming years, the RBA noted Inflation would likely pick up above its target of 2%. Assuming this is all to be the case then we can be sure to expect comments if not action by the RBA which would strengthen the Aussie Dollar.
This Friday is the latest RBA Monetary Policy Statement which is unlikely to yield too much new news following the overnight news and earlier announcements. Friday also sees the latest Home Loan data for Australia which might impact more short term movements on the currency since the strong Australian property market is one of the key drivers on the Australian economy and the currency.
From an investors point of view the Australian Dollar is well worth holding because of its higher interest rates. This presents a much better yield on holding the currency. With the rate cutting cycle the RBA have continued since 2011 now looking likely to be ending investors will be keen to detect whether or not the Aussie is likely to become an asset well worth holding in the future. With global interest rates low and in some cases negative the attractive prospect and therefore the strength of the Australian Dollar versus the Pound should remain.
If you have an Australian Dollar buying or selling requirement and would like further information on what could impact exchange rates in the coming months, call us on 01494 725 353 or email me here and Ill be happy to answer any of your questions.
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