Pound to Australian Dollar exchange rates have seen somewhat of a resurgence in the last few weeks. Just two months back GBP/AUD was trading at 1.76 and yesterday peaked at just shy of 1.84, a 4.5% move. Is it a good time to buy?
Why has the Australian Dollar weakened?
There are a number of factors as to why the AUD has devalued sharply against the Pound. Of course we have the Brexit effect. With the threat of a ‘no-deal’ becoming increasingly unlikely, sterling has rallied against a number of currencies. We have also seen signs of a break through in the US/China trade war. Representatives are due to meet on the 15th October to see if they can re-negotiate a deal. Some analysts believe this could be a possibility and it has caused a risk-on move on the currency market.
Another factor to take into account is what the Reserve Bank of Australia is planning. We have recently seen the central bank cut interest rates to help boost the Australian economy. There are suggestions that they will cut again. Another reason as to why the AUD could fall further in the coming weeks and months.
In short all factors appear to be positive for those looking to buy the Australian Dollar. Would I buy now? Personally I would hold. I think we could see the Pound vs Australian Dollar test 1.90 soon.
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