GBPAUD rates sat comfortably above the 2.0 mark a couple of weeks ago, but have since slid into the mid 1.90s. The EU referendum is likely the cause but Australia has enjoyed strong economic data surrounding employment rates.
With the RBA (Reserve Bank of Australia) meeting this evening there is no real chance of any Interest rate cuts. The RBA had previously cut interest rates to their lowest ever 1.75% prompting the Aussie to weaken. Recent economic data has shown Unemployment falling to 5.7% and Gross Domestic Product (GDP) rising to 1.1%, much higher than expected. It is not all good news though as there are concerns over wage growth and Inflation is a worry as it is in most other economies.
Whatever the reasons the lack of cuts should help the Australian dollar to strengthen although we should be looking closely at the commentary afterwards as to hints of any future cuts.
The GBPAUD rate which seemed so comfortable above 2 very recently ago is now back firmly in the mid 1.90’s having dropped 9 cents and nearly 5% in less than 2 weeks. This is predominantly down to movements on the pound with investors becoming fearful of the UK Referendum vote which just lately has shown the Leave camp leading in two different polls. The improved Australian data has also helped but it will soon also be Australia’s turn to go to the polls with their election scheduled for the 2nd July. It is likely the Australian dollar will come under pressure as we approach this time which is just after a week over the UK Referendum. Trying to predict the rates at this time is very difficult but will present opportunities for buyers and sellers. Considering the near ten cents movement on the GBPAUD rate as a result of swaying voter’s polls in the last two weeks, wild swings on this currency pair near and after the vote seem very likely.
Remain is still the bookies favourite which if true should see the pound rise before attention turns to the Australian vote where the Aussie will be weaker. Brave Australian dollar buyers with pounds could therefore see an excellent window of opportunity but one that does come with real risk. If you have any Australian dollars to buy or sell for pounds than making some plans and considering all of your options sooner rather than later seems like a very sensible plan. Rates could go easily retest the recent lows in the 1.80’s or soar comfortably back over the 2 mark.
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