So far for the beginning of the week we have seen a huge amount of volatility on GBP/AUD rates, with the Reserve Bank of Australia keeping interest rates at their record low of 1.5% on Tuesday morning and amidst political and economic uncertainty in the UK.
The below table shows the change for the GBP/AUD rate in the last 30 days and the resulting difference when converting £200,000 to Australian Dollars:
|Currency Pair||% Change||Difference on £200,000|
Following the RBA’s decision to keep rates on hold, Governor Philip Lowe made a speech on Tuesday morning in which he looked to outline the bank’s future policies and give some forward guidance to individuals and businesses as to what to expect in the coming months.
His comments have helped strengthen the AUD and we are now seeing some of the best levels for selling AUD in the past month, in a year which has been particularly bleak for the Aussie so far. In his speech Lowe expressed his commitment to improving the ‘prosperity and welfare of the Australian people’ and pledged that his board would reach this goal by looking for a pick-up in wage growth, inflation and the jobs market.
With all of these figures below the bank’s target at the moment it is looking unlikely that we will see a rise in interest rates any time soon, but the markets seem to have reacted well to his comments with the AUD making some marginal gains against the Pound since. On Friday morning the RBA will release their latest monetary policy statement which usually follows their interest rate decision. This should give some further insight in to the RBA’s policies for the future and could pave the way for further AUD volatility.
Although economic activity has been fairly subdued of late there was some good news yesterday for Australia’s export market, with the White House stating that a deal between the US and Australia over steel and aluminium import tariffs would be agreed ‘shortly’. Tariffs of 25% on steel and 10% on aluminium from Australia in to the US were due to be announced this week, which would have been extremely damaging for the Australian export market given their reliability on this kind of trade, but it now looks as though a deal has been struck to make Australia exempt.
Looking ahead this week and tomorrow there are trade balance figures released at 02:30 and are a key indicator as to how well the overall economy is performing and therefore have a direct impact on the value of AUD. It is expected that the figures will show a drop for March and this could see some of the Aussie’s recent gains reversed. As this data is released outside of office hours, a limit order could help you take advantage of any spikes in your favour if you are buying AUD. Speak to your account manager at FCD to find out how our range of contract options could work for you.
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