Welcome to Pure FX's latest update of the pound to Australian dollar interbank exchange rate. This tells you when it's an excellent time to exchange pounds to Australian dollars, for your money transfer!
Sterling has lift-off versus the Aussie! The pound to Australian dollar interbank exchange rate has reached its highest in 5 weeks today, or since May 17th, at 1.7961.
As a result, it's an outstanding time to transfer money from the UK to Australia, if you plan to buy a property Down Under or to emigrate. This is because you'll currently receive more Aussie dollars than any time since mid-May.
Aussie Weakens, as RBA Omits Reference to Higher Interest Rates
The pound has strengthened against the Australian dollar, because Australia's central bank, the Reserve Bank of Australia (RBA), has omitted a reference to lifting interest rates.
In the minutes of the RBA's latest meeting, released this morning, the central bank left out a line that the next move in Australia's interest rates might be "up, rather than down".
This suggests that the RBA may now be likelier to keep interest rates at their all-time lows of 1.5% for longer. This makes investing in Australian dollar-denominated assets less profitable, thus weakening the Aussie dollar.
AU Dollar Falls, as Economists Predict Lower Aussie Rates for Longer
This has dragged down the AU dollar, because following the RBA's minutes, several economists said that they think Australia's interest rates will now stay lower for longer.
For instance, Capital Economics' Paul Dales said that "We do think that the RBA has become a bit more dovish in recent months." By "dovish", Mr. Dales means that he thinks the Reserve Bank of Australia feels less upbeat about Australia's economic outlook.
In turn, the RBA could keep interest rates low at 1.5%, to support Australia's economic growth. This has weighed on the Australian dollar also today!
Aussie Dollar Declines, as RBA's Lowe Points to Slow Wage Growth
What's more, the pound to Australian dollar interbank exchange rate has also strengthened, because Reserve Bank of Australia governor Philip Lowe has warned of slow wage growth in Australia.
Speaking last Wednesday June 13th to Australian Industry Group, Mr. Lowe said that "we are still trying to understand fully why" wage growth in Australia and other industrialised countries has slowed since the financial crisis.
As a result, if Australians' wages rise more slowly, Australia's GDP growth could decelerate in coming years. This has thus weakened the Australian dollar recently!
Australian Dollar Falls, as Low Wage Growth Signals Low Interest Rates
The AU dollar has also lost out, because with low wage growth in Australia, Australia's inflation will remain lower for longer too. As a result, the RBA is under less pressure to lift Australia's interest rates.
For instance, RBA governor Mr. Lowe said last Wednesday that "wages growth of 2% and reasonable labour productivity growth are unlikely to make for 2.5% inflation on a sustained basis."
Given this, if Australia's low wage growth keeps both Aussie inflation and interest rates, placing money in Australia will be less profitable for investors. This too has dragged down the Aussie dollar!
With all this in mind, the pound has reached this 5-week high against the Australian dollar, and could continue to climb, looking forward. Make the most of this excellent exchange rate to buy your Australian dollars!
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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 firstname.lastname@example.org.