GBP/AUD exchange rate movement as Australian interest rates reach record lows: Could the RBA cut interest rates even further?
The pound to Australian dollar exchange rate strengthened once again overnight after the Reserve Bank of Australia (RBA) released their minutes. The RBA suggested that they may be consider cutting rates again in the near future. Interest rates are at their lowest level in history in Australia and if further rate cuts happen then this could lead to problems for the Australian dollar.
The central bank has also suggested that interest rates will remain on hold for a long period of time. This is an attempt to help the jobs market as unemployment has been rising recently. Australian unemployment is at 5.3% at the moment after hitting a seasonal low earlier this year. Unemployment down under is now at its highest point in over a year so things are looking uncertain down under at the moment.
US cuts interest rates overnight
The US Federal Reserve cut interest rates last night in attempt to help the US economy. The Chair of the Federal Reserve Jerome Powell claimed that as inflation in the US is still below target and growth remains ‘moderate’ then the US may consider cutting rates once again. As the world’s leading economy any signs of a slowdown can often result in a reduction to global risk appetite. This appears to be another one of the reasons behind the weakness of the Australian dollar against the pound.
Bank of interest rate decision: What to expect
The Bank of England will be meeting later today to discuss their own monetary policy decision. It is forecast that the BoE will hold interest rates a t0.75%, any deviation from this may see volatility for pound to Australian dollar exchange rates. This will be the last meeting before the 31st proposed Brexit deadline so this one will be very closely watched. Overall, the pound could potentially rise further against the Australian dollar as we end the week. If you would like further information about buying or selling Australian dollars then contact me directly for a free quote. Having worked in the foreign exchange industry since 2003 I am confident of being able to offer you bank beating exchange rates.
