AUD has enjoyed major highs against Sterling since the UK’s vote to leave the EU. And whilst exchange rates still favour the Dollar, Sterling has already clawed back some of its losses since the historic vote, and the trend is likely to continue.

Chinese GDP figures dampen AUD

Chinese inflation data published on Friday morning caused the AUD to weaken against the Pound by over 2 cents during the course of the session. As Australia’s biggest trading partner, and coupled with lower commodity prices this could be set to weaken the Aussie Dollar in the weeks ahead.

It’s unclear as to what is causing copper and Iron prices to fall but an oversupply in the market could be the driving force. With the RBA recently cutting interest rates to a second record low this year, what options do they have left?

Housing price boom in Sydney linked to lower interest rates

The RBA’s decision to cut rates is having a significant impact on the housing market in some of Australia’s top destinations. In a recent interview, outgoing RBA governor has said he has ‘some discomfort’ about the rising house prices in Sydney and any cutting of interest rates could exacerbate the problem. With lower interest rates comes cheaper mortgages which could cause a huge divide in housing prices across Australia.

Having governed the Australian economy for the last decade Stevens will leave his role at the end of the week and will be replaced by Governor Lowe. Lowe has a significant job on his hands, with other commodity nations engaging in currency wars to improve their exports, lowering interest rates could in fact do more harm than good.

If you are selling Australian Dollars for Sterling, I would consider making the most of the recent highs. Sterling is making headway against most currencies and could be set to continue in the months ahead.