Daily Archives: October 3, 2017

GBP AUD Under Pressure as Brexit Tensions Escalate Further (James Lovick)

The Reserve Bank of Australia (RBA) held interest rates last night as widely expected at 1.5%. The general feeling is that rates will not change until 2018 at the earliest but is important to highlight that there is a growing concern over the strength of the Australian dollar. A strong dollar is bad for Australia’s exports and the RBA has been known to jawbone the currency by making statements surrounding monetary policy that have the effect of moving the currency without the central bank actually having to take specific action. Looking forward we are likely to see such arm twisting from the RBA and the Australian dollar could see some weakness in the coming months.

GBP AUD exchange rates could also see a sizeable boost if Britain and the EU can get to a point of “sufficient progress” with the EU. As things stand the pound remains in a very weak position with all the uncertainty that surrounds Brexit. Any signs that there will be a future trading agreement should see the pound make considerable gains although we are not at this stage yet.

This week Jean Claude Juncker and Michel Barnier have both highlighted that more needs to be done. Expect more mileage from Brexit and there could be some good opportunities in the coming weeks for buyers and sellers alike. Clients looking to sell Australian dollars could see a small window of opportunity if tensions rise.

Australian retail sales numbers and trade balance data are released on Thursday and could create some volatility for the Aussie dollar. Data on Thursday focussing on the construction sector will also be keenly viewed as it may give some clues as to where the sector is heading. There have been ongoing concerns over Australia’s buoyant property market and it is expected to only be a matter of time before a wobble is seen at the top.

It is traditionally the construction and housing markets which are the first to fall ahead of a downturn. Whilst we may not be there yet any signs of a slowdown starting to happen down under could see the dollar weaken.

If you would like further information on sterling or 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

GBP/AUD Forecast – RBA Keep Interest Rates on Hold (Matthew Vassallo)

The Reserve Bank of Australia (RBA) kept interest rate son hold overnight at 1.5%, with the Pound making some small gains against the AUD this morning.

GBP/AUD rates have touched 1.70 again but the AUD is continuing to find support around this threshold.

It is likely that investors will need to see evidence that the Brexit negotiations are progressing, in order for the Pound to make any aggressive move above this level.

A recent downturn in Australia’s economic output and a report indicating that the RBA may not raise interest rates until 2019, has weakened the AUD’s value.

It was only a few weeks ago that GBP/AUD were trading close to 1.60, so the current high and recent improvement may be the opportunity those clients holding GBP have been waiting for.

The Pound has also benefited from talk of a prospective rate hike by the Bank of England (BoE) but this is still not guaranteed and may have already been priced in to Sterling’s current value to some extent.

We also need consider the on-going negative perception around Brexit negotiations and with UK PM Theresa May struggling to keep her party aligned, many negative factors continue to weigh heavily on the UK economy.

For these reasons I would not be gambling on a major spike for the Pound over the coming weeks, with any trade around 1.70 offering significant value in my opinion.

If you have an upcoming GBP or AUD currency transfer to make you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over eighteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award inning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on mtv@currencies.co.uk to find out all the options available to you ahead of your currency transfer.