The pound to Australian dollar exchange rate has been trending lower in the last few weeks from a peak of 1.88 in May down to 1.76 in July. The outlook for the Australian dollar has been largely linked to changes in Australian interest rates, with a focus on the words and actions of the RBA (Reserve Bank of Australia).
RBA interest rate cuts and the US China trade war: How have these influenced the GBP/AUD currency pairing?
The lowering of interest rates will generally speaking weaken the currency concerned although with the RBA having cut interest rates twice this year, in June and July, the lack of firm commitment to further cuts and actually strengthened the currency.
Also, a truce in the trade wars between China and the United States has seen the Aussie rise, as investors find more confidence in the economic outlook ahead. The Australian dollar can rise and fall according to sentiments relating to the global economy, since it depends heavily on its exports of raw materials like Iron Ore and Aluminium.
Boris Johnson forms new government cabinet
The pound has been slightly more volatile following the announcement of the new British Prime Minister, as Boris Johnson stamps his authority on the new government with a wide range of sackings and promotions to fit his outlook and direction on Brexit.
The Aussie dollar has actually weakened slightly towards the end of this week as a recent speech by Governor Lowe indicated that interest rates are likely to remain lower for a longer period of time.
Bank of England interest rate decision next week: What is expected to happen?
Next week is the latest UK Bank of England interest rate decision, which will provide the market with further news regarding the outlook ahead for the pound and interest rates. Expectations in the future could see sterling coming under increasing pressure, if it appears interest rates might be cut.
GBP/AUD levels are trading in the 1.79’s, some 9 cents below the post-Brexit vote highs of May 2019, but 20 cents above the post-Brexit lows of 1.59 in October 2016 on the interbank rate.
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