GBPAUD rates more like to fall than rise

Despite having cut interest rates only 3 weeks ago tomorrow the Australian dollar remains at fairly similar levels to where it was at the time of the cut. There is much being made of the fact that whilst the RBA would ideally like to weaken the currency to help drive up its exports cutting interest rates is not having the desired impact.

Australia is still enjoying a housing boom and with property prices rising alongside the costs of raw materials which Australia exports the economy and the currency should find better ground in the future even if the RBA do surprise with further cuts.

Will GBP/AUD fall below 1.60?

Last week showed Unemployment data rising which has also helped the Australian dollar to strengthen. A principal factor too in the Aussies strength is that despite cutting interest rates other central banks have much, much lower interest rates and from an investor perspective would rather hold the higher yielding currency like the Aussie than weaker ones such as sterling.

I would expect therefore the GBPAUD rate will continue to fall in the coming weeks and months as investors shun the pound amid heighted political and economic uncertainty. I would not expect rates to fall below 1.60 quickly but to find some support in the mid 1.60’s over the course of the next few weeks as Australian data continues to support the currency and pressure remains on the pound.

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