Daily Archives: August 15, 2017

GBP/AUD Forecast Difficult to Judge (Ben Fletcher)

Sterling dropped today after inflation defied expectations and held at the previous level of 2.6%. There was hopes that inflation may rise up to 2.7% however it didn’t happen and the markets responded with Sterling losing a cent against the Australian Dollar. Whilst Sterling has dropped today, in my opinion it didn’t quite go as far as I thought it might. This is due to some of the concerns with the Australian economy which does suggests the Aussie strength is dwindling.

The number of new builds expected in the next few years in Australia looks set to fall which has an effect on the price of housing and the amount of jobs across the country. There is low inflation levels in Australia and despite the Reserve Bank of Australia suggesting they may increase interest rates to 3.5% in the next few years, they wont before inflation rises. This suggests that whilst the GBP/AUD is currently sitting around the mid 1.60’s if good news for Sterling becomes apparent the rate could rise sharply to 1.70.

Unemployment Tomorrow

In the short term there will be Unemployment Data in the early hours of Thursday morning which is expected to show July’s rate has stayed the same as June, however any deviation from this could have a positive or negative effect on rate depending on the direction. Currently with Sterling struggling and on a negative streak I do think there is more chance of the rate falling than going up.

If you do have a question with regards to my forecast or have a different question please get in touch. When you come to moving large sums of money a movement of a cent can often relate to a significant difference in your returns. Helping you formulate a strategy could make sure you’re in the best position to exchange currency when the market is in your favor, please contact me Ben Fletcher at brf@currencies.co.uk

 

Where next for the Pound vs Australian Dollar? (Tom Holian)

The Pound vs the Australian Dollar has marginally crept up overnight after the Reserve Bank of Australia suggested that the construction sector down under is beginning to show signs of a slowdown. If this carries on it could result in a lot of job losses going forward which is likely to be detrimental to the Australian economy.

According to a report from BIS Oxford economics they have also forecast as fall of 31% in the number of new properties being built over the next three years and this could be the biggest drop in almost twenty years for the sector.

Australian household debt has also seen an increase to as much as 190% of household income which is clearly far too high.

This is a big concern for the RBA who have a difficult decision concerning interest rates and which direction they will move them in.

It could be argued that an interest rate hike is necessary to cool the already over-heated property market but with household debt rising an interest rate hike could cause big problems for the economy.

Therefore, the RBA have been rather cautious recently with monetary policy and have used the practice of ‘jawboning’ which is essentially suggesting something may happen without actually doing anything.

Overnight tonight Australian unemployment data is due out with the expectation for 5.6% so anything different could result in volatility for Sterling vs the Australian Dollar.

If you have a 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 (Tom Holian) on teh@currencies.co.uk and I will endeavour to get back to you as soon as I can.