Daily Archives: October 25, 2017

Australian inflation and UK GDP push GBPAUD above 1.70

GBPAUD exchange rates have strengthened by 3 and 1/2 cents today off the back of Australian and UK economic data  releases. To put this into monetary value a £200,000 transfer at the high of the day compared to the low would have achieved our clients an additional 7,000 Australian dollars.

In the early hours of the morning Australia released their latest Consumer Price Index (inflation) numbers. Forecasters were predicting 2% however the inflation numbers disappointing and fell to 1.8%, leading to a sell off of the Australian dollar. The reason for the Australian dollar being heavily sold off is because now inflation has fallen the Reserve Bank of Australia will continue to give dovish statements in regards to interest rates.

Later in the morning the third revision of UK GDP was released. GDP exceeded expectation and was released at 0.4% from 0.3%. This doesn’t seem much, however it shows growth and something that many economists have not foreseen. The pound strengthened dramatically against all of the major currencies as this data release could be the final nail in the coffin and the Bank of England will be forced to raise interest rates on November 2nd.

For clients buying Australian dollars using sterling, central levels have now broken through 1.70 and for many clients this has been there target over the last 6 months. People need to remember that central levels were in the 1.50s not long ago. For clients trading short term, you need to decide whether to cash in now or wait for the Bank of England’s interest rate decision.

If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company drl@currencies.co.uk.

 

GBPAUD rises on Australian Inflation data!

The Australian dollar has weakened in overnight trading as uncertainty over the Inflation outlook for Australia shifts which has raised concerns over when the Australian Reserve Bank (RBA) would raise interest rates. This is presenting a very interesting short term opportunity to buy Australian dollars which may not last. This morning at 09.30 am is UK GDP and then next week the Bank of England decision which could see the pound slide further, there is of course no guarantee of this but it is a real possibility.

Overall the pound seems like it will lose value in the coming weeks as Brexit uncertainty continues to be a thorn in the side of the pound. Economic data is also starting to suffer so if you need to buy Australian dollars getting something changed on any spike higher seems to me the safest bet. The Aussie is much stronger against the pound because markets are bracing themselves for an interest rate hike longer term, whilst this might have taken a minor step back on the Inflation data overnight, it is still the central element of most forecasts.

Combine the longer term rate hike down under with the uncertainty of politics and economic data in the UK and we can sketch out a fairly concerning scenario for AUD buyers with pounds. If you have a transfer to make in the future buying or selling Australian dollars, making some plans around this latest shift in the market is very sensible. Overall there is a very strong belief that further volatility exists up ahead, it should not be taken too much for granted the Bank of England will raise rates next week and the pound will rise.

Thank you for reading and if you wish to discuss or run through the market please do not hesitate to get in touch with me Jonathan by emailing jmw@currencies.co.uk