Foreign Currency Exchange

The Australian dollar has fallen to 6- month lows against the USD, and prices for the GBP/AUS cross are as good as they have been for some time. Much of this has been the result of speculation that the RBA are looking to cut interest rates, not great news for a currency that benefits from carry trading due to it’s high 7% base rate. The Aussie did received a brief lift after the Reserve Bank of Australia (RBA) raised its short-term inflation outlook, while its quarterly statement on monetary policy contained little to suggest it would cut rates aggressively in September.

Markets are still pricing in a very real chance of a 25 basis point cut in September, although this will seemingly depend on the inflationary outlook over the next month as the RBA’s quarterly statement did highlight to investors the upside risk to inflation. Stephen Halmarick, co-head of economics and market analysis at Citi said, “Rate cuts are certainly coming but more gradually than markets are now pricing”.

With rate cuts expected there may well be good news on the horizon for those with an Australian Dollar purchase to make in the future, with Limit orders an excellent idea to maximise the amount of dollars you can get for your Sterling.