GBP/AUD rates may struggle to recover

GBP/AUD rates continue to float around 1.70 on the exchange, with the Pound struggling to make any sustained inroads above this threshold. Despite yesterday’s positive move for Sterling during afternoon trading, I do not feel we will see this spike continue at any great pace. Yesterday’s Reserve Bank of Australia (RBA) minutes indicated that the central bank expect a period of sustained growth, which is likely to bring about further investor confidence in the AUD.

As touched on in yesterday’s report it wasn’t entirely clear what the RBA’s current stance is but whilst they will likely remain open to further interest rate cuts if they feel it is necessary, another one does not look imminent.

We also need to consider that whilst global interest rates remain fairly low, the AUD will become even more attractive to investors due to its higher yielding returns. Therefore if investors start pumping their money into the AUD it will gain value against GBP as a result. There is also a high level of uncertainty surrounding the UK economy at present and this is hardly likely to drive Sterling’s value forward. Whilst current market conditions remain as they are, I feel GBP/AUD will struggle to break through 1.75. However, market conditions can change quickly and aggressively so it is important to stay in close contact with your account manager, who can help you navigate this turbulent market place.

Looking ahead and focus will now switch to Australian employment data and their official unemployment rate, which will be released overnight. Any deviation from the 5.8% expected is likely to cause additional volatility on GBP/AUD exchange rates.

Aussie Dollar sellers may want to make the most of the current highs against Sterling. Equally, Aussie Dollar buyers may want to make a transfer in the event the markets move further against you. Either way, our brokers are equipped to deal with both needs, call us on 01494 725 353.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.