The pound is now trading close to its best level to buy Australian dollars since June 2016 following news down under that both consumer confidence has started to suffer combined with a reduction in housing finance.
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Commodity prices have also come under pressure recently and as Australia is so heavily reliant on commodity prices and their relationship with China this has caused the Australian dollar to suffer recently.
Australian GDP data has shown a disappointing fourth quarter and this is likely to encourage the Reserve Bank of Australia (RBA) to look at cutting interest rates sooner rather than later. The current expectation is for one to come in the summer with another interest rate cut towards the end of 2019.
Iron Ore which is one of Australia’s main commodities has risen over the last couple of days, and this would typically help to strengthen the Australian dollar. However, with demand in China reducing as they are the world’s largest consumer of their natural resource this is why we have seen the Australian dollar coming under pressure.
According to statistics, about a third of Australian exports go to China so any slowdown will often have a negative effect on the AUD, which is becoming more evident recently. Chinese growth is currently at its lowest level in 28 years and is at 6.6% during 2018 after having fallen to 6.8% the year before. Indeed, if you were to look at the rate of the Chinese slowdown in comparison to the Australian dollar there is a trend that can be identified between the two.
The other factor weighing heavily on the value of the Australian dollar is the ongoing US China Trade Wars which are still rumbling on. If and when this can be finally resolved this could cause the AUD to strengthen but until then it is quite possible that the currency could continue to remain under pressure.
Ultimately in the short term the GBPAUD exchange rates are likely to be affected by the ongoing Brexit news so if you’re considering making a transfer to Australia you may wish to consider these current 2 ½ year highs.
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