Pound to Australian Dollar rate hits 2-year high, where to next for GBP/AUD?

GBP to AUD Rate: Pound vs Australian Dollar Back Above 2, but Could Chinese Economic Data Support the AUD?

In early trading yesterday the GBP/AUD rate hit its annual high, which was also the highest level the pair have hit since the Brexit vote back in June of 2016. At its highest level it hit 1.8622 and at the time of writing the pair are now trading in the mid-1.84’s so there has been a slight sell-off already since yesterday’s spike.

Those of our clients and readers planning on making currency exchanges from pound’s to Aussie dollars are now able to trade at attractive levels considering the prices available over the past 2-years, which is interesting considering the pound’s performance against most other major currency pairs.

There has been a slight boost for sterling recently owing to the hopes of a Brexit deal being agreed over the next few weeks, but not to the extent of its gains against AUD. Australian dollar weakness has aided the pound’s performance as the outlook down under appears weak at the moment. AUD is also trading at a 2 and a half year low against the US dollar, and this comes at a time that the Australian interest rate is at a historical low. The difference between the US offering and Australian offering is at its greatest since the Aussie dollar begun circulating.

With the FED Reserve Bank in the US expected to make further rate hikes over the next year, the gap between AUD and US interest rates is expected to widen further which is one of the reasons for Aussie dollar weakness, as the currency has lost its competitiveness for holding deposits.

Chinese stock markets have been losing value throughout the year owing to the trade war with the US, and this has also negatively impacted AUD’s value as China is Australia’s main trading partner. China has recently made amendments to the required capital Chinese banks must hold on account. This has been viewed by the markets as a sign that China is trying to encourage growth and this in-turn has impacted AUD’s value.

I expect tomorrow to be the busiest and most important for GBP exchange rates this week, as the EU is expected to offer the UK a free-trade deal on their terms. It’s expected to contain roughly 30-40% of the Chequers plan devised by UK Prime Minister, Theresa May so it will be interesting to see how this news pans out and how the markets react.

Use the form below to request further information on the factors impacting GBP/AUD rates in the short term, I’ll be happy to get in touch personally and discuss your enquiry.