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Aussie Dollar Hits 1-Week High Versus Pound, as RBA Upbeat on Economy

Market CommentaryAussie Dollar Hits 1-Week High Versus Pound, as RBA Upbeat on Economy
The Australian dollar to pound interbank exchange rate has hit 0.5677 today, its highest since Febuary 13th, as the Reserve Bank of Australia is positive about Australia
The Australian dollar to pound interbank exchange rate has hit 0.5677 today, its highest since February 13th, as the Reserve Bank of Australia is positive about Australia’s economy, in the RBA’s latest minutes. Image credit: Adrian Van Leen.

by Peter Lavelle

Welcome to Pure FX’s latest update of the Australian dollar to pound interbank exchange rate.

This tells you when it’s a favourable time to exchange Australian dollars to pounds, for your money transfer!

The Aussie jumps versus sterling! The Australian dollar to pound interbank exchange rate has hit 0.5677 today, its highest in 1 week, or since February 13th.

The Australian dollar has risen against the pound, because today the Reserve Bank of Australia (RBA) has released its latest meeting minutes, in which the RBA is upbeat about Australia’s economy.

The AU dollar has strengthened, in particular because Australia’s central bank highlights Australia’s low unemployment rate of just 5.5%, and points to “the strength of the labour market.”

What’s more, the Aussie has also risen, because in its minutes the RBA forecasts that Australia’s economy will grow “a bit above 3%” over the next few years, a solid GDP growth rate.

In addition, the Australian dollar has climbed too, because the Reserve Bank says that Australia’s inflation is close to its 2-3% target band, and that “further progress was expected” here.

The RBA’s minutes have boosted the Australian dollar, because they paint an upbeat picture of Australia’s economy, in particular with regards to low unemployment and robust GDP growth!

Australian dollar rises, as RBA signals “relatively low” mortgage stress

Furthermore, the Australian dollar has also risen versus the pound, because a Reserve Bank of Australia policymaker has said that Australia’s household mortgage stress is “relatively low”.

Speaking today, RBA assistant governor Michele Bullock said that “the risks to financial stability from household mortgage stress are not particularly acute at the moment”, thus lifting the Aussie.

Moreover, while Ms. Michele Bullock added that “pockets of financial stress do exist” in Australia’s mortgage market, they’re “small and relatively stable in early 2018”, so boosting the AU dollar.

Also, the RBA policymaker said that, while investors may have above-average mortgage debt, investors “may be better able to absorb interest rate shocks”, thereby helping the Australian dollar.

Ms. Bullock feels confident that Australia’s mortgage stress is “relatively low”, even though Australia’s average household debt has risen by +20% since 2012, to 140%, thus strengthening the Aussie too.

With all this in mind, the Australian dollar to pound interbank exchange rate has hit this 1-week high, and could continue to climb!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

References

1. David Scutt, “The RBA says financial stress for Australian households remains ‘relatively low'”, February 20th 2018, BusinessInsider.com.au, https://www.businessinsider.com.au/rba-financial-stress-low-households-2018-2
2. Swati Pandey, Wayne Cole, “Australia central bank maps steady rate path, wary on mortgage debt”, February 20th 2018, Reuters.com, https://www.reuters.com/article/us-australia-economy-rba/australia-central-bank-maps-steady-rate-path-wary-on-mortgage-debt-idUSKCN1G4038?il=0

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