Daily Archives: August 4, 2017

Will pressure on Sterling result in further falls for GBP/AUD, even if the RBA doesn’t want a stronger Aussie Dollar? (Joseph Wright)

There has been a lot of talk recently from both economists as well as the Reserve Bank of Australia that the Aussie Dollar is an overvalued currency.

Of all the major currencies the Aussie Dollar is the 4th best performer so far in 2017, and whilst this sounds like a positive thing to many the reality is an overvalued currency isn’t great news for export driven currencies due to the fact that it makes purchasing goods from Aussie more expensive, and therefore negatively impacts the economy.

The issue the RBA have is that cutting interest rates again in order to stem demand for the currency isn’t easy, as the likely market reaction within the property market would be negative. This is why I don’t think there will be a rate cut, as the property market is already overheating and if they make mortgages even more affordable that problem could spiral, especially in the East-cost of the country where property prices are already very high and unaffordable in many cases.

The Pound is coming under increasing pressure due to the Bank of England’s decision not to raise interest rates, and also just yesterday it emerged that the BoE’s forecast for the UK economy in 2017 isn’t going to grow at the rate they had previously expected.

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.

 

Where can we expect GBPAUD rates to go in August?

I would be very surprised to see GBPAUD slip below 1.60 but equally surprised to see it rise above 1.70. Current levels in and around the 1.65 represent a fairly mid range price from what we have been used to for most of 2017. The pound has of course been the big loser with uncertainty over the Brexit but trends on the Australian dollar have also been really important. If you have a transfer buying or selling Australian dollars understanding the market and all of your options is key to maximising the opportunity for your transfer.

Yesterday was the big news for the GBPAUD exchange rate, the UK’s Super Thursday of data releases including the Bank of England and the Quarterly Inflation Report. The pound could easily drift lower in the coming weeks but the move yesterday was definitely something for both buyers and sellers of Australian dollars to take note of. Basically the lack of any interest rate hike for the UK makes it very difficult to expect the pound to rise sharply this month. What can we learn from this?

If you have a transfer to make buying the Australian dollar with pounds the outlook for sterling remains uncertain and expecting big improvements could be very risky as many clients have found out recently. Conversely clients looking to sell AUD for GBP are in a very good position because of the weakness of the pound which is representing a very good opportunity for them to sell.

I expect GBPAUD to trade in a range of between 1.62 and 1.67 for the rest of August. If you have a transfer to make in the coming weeks and wish for a better level please let me know by emailing jmw@currencies.co.uk. Thank you for reading and please let me know if there is anything I can help with.