Pound to Australian Dollar rates: A tricky time to predict Australian Dollar exchange rates

Pound to Australian Dollar outlook GBPAUD back below 1.80

There are four main factors that will generally impact the value of a currency, these being the following;

  • Economic stability
  • Political certainty
  • Acts of terror
  • Acts of god

What may happen with Pound to Australian Dollar exchange rates?

Currently if you look into the economic performance and what is going on around the world this might suggest that the Australian dollar may weaken. There is a high chance of an interest rate cut from the Reserve Bank of Australia (RBA) at the next interest rate announcement next week, the key will be comments in the monetary policy statement as to what future plans are from the RBA for future changes in rates.

A number of institutions expect further rate cuts later in the year and should this be hinted at then we may see Australian dollar weakness in the early part of next week.

US China trade 95% done: Will a deal improve GBP/AUD exchange rates?

What does add a complication to the mix is that on the political front, the US-China trade war is apparently ‘95% done’, according to US treasury secretary Steven Mnuchin, which could be seen as good news for the Australian dollar.

We must be wary that the final 5% will most likely be the most important part so I would be surprised to see a deal come through in the near term, but when Donald Trump and China are involved nothing should be seen as a surprise.

As regular readers will be aware, Australia can be impacted by economic and political news for China because of the close trading ties and the sheer volume of tourist dollars spent by Chinese residents.

Couple this with the fact that the Australian dollar is also perceived as a ‘riskier’ currency, and global tensions or trade wars can decrease risk appetite for investors and lead to Australian dollar weakness.

This is an extremely tough time to predict movement for the Australian dollar, so if you have a large currency exchange to carry out then you need to make sure you have a close eye on the market, or that you use an experienced and proactive currency broker that can keep you informed of the ever changing market conditions.

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