Sterling has been trading at a near three weak high after good trade survey news which asked executives of distribution companies what they thought about the short term outlook. The data was expected to show a negative trend however it came back significantly better than expected.
The Aussie Dollar against Sterling has been trading particularly high in the last few months primarily because of the Brexit. However there were signs of AUD strength before that moment mainly as the Chinese markets started to settle after what many believed was going to be a major crash.
RBA may start to change rates
Moving forwards the Reserve Bank of Australia are likely to look to influence the AUD. Whilst Australian businesses are able to purchase good abroad, especially the UK for a low rate their exports are expensive. China is the biggest trading partner Australia and whilst things are okay there then the Aussie will most likely stay strong. Should there start to be problems in China investors may rapidly move their funds from the currency.
The other major bonus in the AUD is the interest rate level. Most of the developed financial worlds have very little or no interest available at the moment. This makes the 1.75% available down under an attractive place to store any funds. There may be traders doing something known as carry trading where the take a loan out in a low interest area and store it in a high interest currency. The danger for the hosting country in this case Australia is that you end up with an inflated currency, moreover if something negative happens investors unravel their positions and the currency plummets.