The Pound is now trading close to its best level to buy Australian Dollars since October 2018 as the Australian economy has been showing signs of a slowdown recently.
However, yesterday the AUD managed to strengthen against Sterling with the combination of the Brexit news with Australian inflation data coming out at 1.8% for the year on year figures.
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The Reserve Bank of Australia has been under a lot of pressure in recent months to consider an interest rate cut but this has been made more difficult by yesterday’s inflation news. The commonly used approach to combat higher inflation is to raise interest rates but this could be damaging for the economy down under.
Inflation in the last few years has been below the target of between 2-3% set by the Reserve Bank of Australia so with inflation rising back towards the target this could be taken as a good sign but also causes a headache for the Central Bank.
On Friday Australia will release its latest Producer Price Index data well as the RBA Commodity Index. The Commodity Index can be extremely influential in terms of the GBPAUD exchange rate as it measures the price of commodities, and as the Australian Dollar is heavily reliant on its commodity market if the figure is high this can often strengthen the Australian Dollar vs the Pound.
The Australian Dollar has continued to be influenced by what is happening in China at the moment and with China growing at its slowest pace this month in over ten years, as Australia’s largest trading partner, this is one of the main reasons for the negative movement on the AUD.
The next statement by the RBA will come on 5th February so this will be key as to how the Australian Dollar will perform in the near future.
With GBPAUD exchange rates the highest since October 2018 it may be worth taking advantage of these current rates so if you have an upcoming requirement make sure you contact your account manager for a free quote.
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