Daily Archives: July 7, 2017

Disappointing data this week results in the Pound weakening, is the UK economy slowing down? (Joseph Wright)

Throughout the week there has been a series of disappointing data releases out of the UK, along with data this morning from Halifax confirming that property prices within the UK have fallen by 1% with UK house price growth falling to a four-year low.

We found out earlier this morning that manufacturing production within the UK fell last month from the month before, whilst industrial production has also fallen on an annual basis.

The construction sector has also experienced a slowdown recently, and with the raft of bad data released this week it may leave many within the marketplace re-evaluating whether there is much of a chance of an interest rate hike this year.

Unicredit (a major Italian lender) this week forecasted a potential spike of up to 4% if there is a rate hike this year, although personally I cannot see this happening irrespective of the UK’s inflation levels and I think that the Pound to Aussie Dollar exchange rate is more likely to fall between now and the end of the year.

There is talk of a slowdown in the Aussie economy also, but with the UK entering such a crucial time with Brexit negotiations I cannot see Australia’s issues overpowering those of the UK.

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

GBP/AUD Forecast – Is the Australian Economy Heading for a Collapse? (Matthew Vassallo)

GBP/AUD rates are still trading above 1.70 but the AUD has found support, after Sterling broke through 1.71 yesterday.

The AUD has fought back, gaining over a cent at the high, as the markets prepare themselves for a busy day of economic data releases.

At 09.30 the latest Manufacturing & Industrial Production figures are released. With an improvement on last month being anticipated by investors, it will be interesting to see whether any positive news has been factored into Sterling’s current value.

Trade Balance figures are also released shortly and this shows how much we spend on imports, compared to the money we make on exports. This is a key barometer for any economy and as such any clients with a GBP or AUD requirement should be keeping a close eye on developments. These figures will be monitored even closer over the coming months, as the UK separates itself from the EU and will be used to gauge how any new trade deals are faring.

However, it will be the latest NIESR Gross Domestic Product (GDP) estimate alongside Carney’s speech, which could shape GBP/AUD rates for the subsequent days.

Any further bullish comments regarding future rate hikes, or a positive reading from NIESR could help Sterling break back through 1.71.

Similarly, any negative reading or diluted comments by Carney could push the pound back down and the recent gains could be eliminated extremely quickly.

Looking at the Australian economy and on the surface, it seems to be performing well. China’s economy has stabilised and this has boosted Australia’s affluent export industry, which in turn has helped to support the AUD’s value.

However, a concerning report released overnight has suggested that Australia’s economy is heading for a potential “economic collapse”, according to former economic & policy adviser John Adams. He had urged the Reserve bank of Australia (RBA) to take pre-emptive action by raising interest rates to prevent Australia’s expanding household debt bubble from exploding and now feels it is too far gone to recover.

Whilst this is one man’s opinion, any negative reports such as these can have a detrimental effect on market perception of an economy and the AUD could suffer over the coming days as a result.

The current market remains as unpredictable as ever, which is why I have been advocating that my clients take advantage of any short-term gains and protect their positions where possible.

I have little confidence in the current UK government producing a Brexit deal that will propel the UK economy forward and with the potential problems facing the Australian economy, are you prepared to risk your currencies value and gamble during such uncertain times?

We are able to help guide our clients through the current market, helping them time their currency exchange to maximise the market value available.

Our award-winning exchange rates, mean that even on a falling market clients will extract the most value and we can also keep you posted with key market developments ahead of any prospective transfer.

Please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt, or alternatively I can be emailed directly on mtv@currencies.co.uk