GBP/AUD Rates Trading Back Above 1.80 Following US Interest Rate Hike

GBP/AUD Rates Trading Back Above 1.80 Following US Interest Rate Hike

GBP/AUD Rates: GBP has made inroads against the AUD over the festive period, with the Pound now trading back above 1.80 as we enter the last few trading hours of 2018.

Sterling received a welcome boost following the US FED’s anticipated interact rate hike, at their recent policy meeting. As expected, the US FED raised rates by 0.25% and indicated that the markets could expect another couple of rate hikes next year. The latest rise means there is a growing disparity between the US interest rate and that of Australia’s.

In years gone by the Reserve Bank of Australia (RBA) would be able to rely on high interest rates attracting investors, who would look for a higher yield and return on their investment. With the RBA keeping interest rates at record lows throughout 2018, the US Dollar has become not only a safe haven currency in times of economic downturn but also now a far more attractive proposition to investors, as US interest rates continue to rise.

GBP/AUD Rates: Can we expect more of the same in 2019?

Whilst there is no indication that the RBA are likely to change their stance in the short-term, due to the Australian economies reliance on global growth, any upturn in the global markets could prompt a change in tact. If US President Donald Trump softens his stance in terms of the current tariffs on China and the EU, this could lead to an increase in investors global risk appetite. In this instance, it is conceivable that the RBA may then look to raise rates in line with any prospective economic upturn.

How GBP/AUD rates evolve over the coming months will also be inextricably linked to the UK’s impending Brexit. We are still no closer to a resolution and with so much uncertainty and multiple potential outcomes still seemingly on the table, it is likely to be a volatile few months for GBP/AUD exchange rates.

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