Daily Archives: August 9, 2017

Sterling Finds Support Against the Australian Dollar before Inflation Data (James Lovick)

GBP AUD exchange rates have picked up today with levels breaking 1.65 for this pair. The pound has largely remained under pressure after the Bank of England held interest rates last Thursday and reduced the UK economic growth outlook going forward. This had the direct impact of a fall in the price of sterling across the board including the Australian dollar. The pound has however found a degree of support today.

Selling Australian Dollars?

There is a very good opportunity for selling Australian dollars into pounds at present and those clients with a pending conversion to make would be wise to get in touch to try and maximise on the rates of exchange which are currently available. Rates for selling Australian dollars are currently 10 cents better than they were in May which means a AUD200,000 transfer will currently generate an extra £7000 based on today’s market value. GBP AUD may be at a turning point however and the pound appears considerably more supported after today’s session.

The very recent escalation of tensions between the US and North Korea are also likely to impact on Australian dollar exchange rates. Things would need to worsen further but any change could see a flight to safety to the US dollar away from the perceived riskier currencies like the Australian dollar. We’re not there yet but it is a reason to consider taking the risk out of the exchange particularly for those clients selling Australian dollars and moving into other currencies.

We trade currency for a number of reasons to include property purchase and sale, salaries paid in other currencies, inheritances, emigration or simply moving savings. If you have requirement for any reason then please get in touch to discuss your requirement and the options available to you.

Australian Consumer inflation expectations will be watched tomorrow for clues as to where future monetary policy down under will be heading. Reserve bank of Australia’s Governor Philip Lowe will be speaking on Friday where he may also offer come guidance as to where the Aussie may be heading next.

If you would like further information on Australian dollar Exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk

Could Sterling face further losses against the Australian Dollar? (Daniel Johnson)

Inflation a growing concern for the UK

The pound continues to weaken against the Australian dollar. The latest UK interest rate decision did the pound no favours. Interest rates closely linked to inflation. Inflation is  a major concern for the UK at present and at one point threatening to breach 3%. We have now seen a a drop to 2.6% and many believe this is a negative for the economy. I do not share this view, inflation is only beneficial if average wage growth is close to being in sync, it is currently some way behind inflation at 1.8%. If consumers are not prepared to pay over inflated prices for their goods and services this is when growth dwindles and there is the potential for a recession.

Their have been rumours circulating the Bank of England (BOE) could hike interest rates should inflation rise above 3%, so the fall to 2.6% was seen as negative to investors and the pound fell in value as a result. The previous monetary policy committee (MPC)  vote came in at 5-3, with three members in favour of a hike. Kristin Ford has left the MPC however, and has been replaced by Silvana Tenreyo who voted to hold rates. The vote now at 6-2 did little to help Sterling against the Euro.

RBA fear the strong Aussie could damage exports

Down under the strength of the Australian dollar is a concern due to the heavy reliance on trade partners buying Australian raw materials. Reserve Bank of Australia (RBA) governor Philip Lowe will know doubt attempt to jaw bone and talk down the value of the Aussie rather than making a  more drastic change to moneatry policy. I doubt jawboning will have the desired impact.

Hans Redeker from Morgan Stanley recently stated “We expect the AUD to continue to move higher in the short-term as yield-seeking behavior continues,”

The high interest rates  offered in Australia are currently very attractive to the investor, especially considering the weaning of the US dollar of late.

In order for the pound  to rally we need a stable government and the stance on Brexit to be made clear. A rise in inflation could force the BOE’s hand on a rate hike, but this it is not a healthy move for the economy and a long shot if you are hoping for this to bolster Sterling against the Aussie.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 16yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving.  I can be contacted at dcj@currencies.co.uk . (Daniel Johnson) Thank you for reading.