Currency news last week was of course dominated by the world wide interest rate decisions, and of course the GBP AUD cross was particularly affected by these. Tuesday’s decision from the Reserve Bank of Australia announced an interest rate cut of 100bps, leaving the cash rate at 4.25%. The slashing of rates has been aggressive in Australia as the RBA has attempted to swiftly cushion the impact of the global economic downturn.

Indeed this was the fourth interest rate cut in as many months, the result of which has been 300bps discounted from interest rates, which now stand at a 6 and a half year low. Normally this would weaken the AUD dramatically, but in a week where the Bank of England lowered interest rates to only 2%, the cross saw a move from the high 2.3’s to the high 2.2’s. With uncertainty still surrounding the British economy and pessimism the overriding feeling in the square mile, it is likely that the cross will continue this trend and test the lower end of the 2.2’s during the course of this week.