Rates to fall further this week?
Improved confidence on the Australian dollar means GBPAUD exchange rates could have further to fall in the coming weeks. The FED’s decision to hold interest rates has helped the commodity currencies. With interest rates in Australia at 1.5% and unlikely to be changed anytime soon, the Australian Dollar represents a good return on investment despite being a riskier currency.
The new RBA (Reserve Bank of Australia) Governor Philip Lowe has also been a little more bullish on the economy stating he felt a bottoming out of the falls seen in the mining Industry and on the key commodities Australia exports, although this would depend heavily on how the Chinese economy is performing, which remains a concern for many.
It looks as though Lowe will hold off on further interest rate cuts, stating that doing so has limited impact on boosting the economy.
With the uncertainty surrounding Brexit we could see further losses for GBPAUD, current rates of exchange are already testing close to their 1.68 lows.
Best time to buy Sterling with Australian Dollars in 3 years
With the commentary from the RBA and worries over Brexit I’m lead to believe that GBPAUD could slide further. Boris Johnson came out last week indicating that Article 50 could be triggered in the early stages of 2017, Sterling lost ground instantly.
This weekend has seen the former chief economist of the IMF predicting the slowdown in the Chinese economy is one of the biggest risks facing the global economy. And with Australia’s reliance on exports to China, this could equate to AUD weakness like what we witnessed last year when similar concerns arose.
With markets moving constantly, and with a FED hike and US election still left to play before the end of the year rates could swing either way. If you are selling Australian Dollars for Sterling, taking advantage of the current rates could save you in the longer term.