Daily Archives: January 9, 2018

Australian dollar predictions

Over the last 4 weeks the Australian dollar has been making gains against sterling which is fantastic news for any client that is holding onto Australian dollars and purchasing sterling. A month ago GBPAUD reached the late 1.70s off the back of the positive news that trade negotiations can begin between the UK and EU.

However in recent weeks the Reserve Bank of Australia have announced that an interest rate hike could actually occur sooner rather than later which is a big surprise as it was only a month ago the RBA warned that an interest rate hike was unlikely to occur throughout 2018.

Many of the leading banks throughout Australia are mixed to whether a hike is likely and therefore the future trends for the Australian dollar exchange rates. For example Commonwealth Bank and UBS are optimistic however Morgan Stanley and Westpac are talking it down. Personally I believe the RBA wont want to be left to far behind the US and they may follow to suit when the US hike, therefore I would keep an eye on US interest rate decisions.

Commodity prices will also be the key driver this year for the Australian dollar which is no surprise. Again Commonwealth Bank and UBS are optimistic that Iron Ore will continue to increase where as Morgan Stanley and Westpac believe a major slowdown is on the horizon for China, which will therefore mean demand for iron ore will drop, consequently having a detrimental impact on the Australian economy and dollar. Its very difficult to predict however with growth forecasts for China suggesting a slowdown is on the horizon, I tend to lead towards Morgan Stanley and Westpac’s predictions.

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.

Australian Dollar Supported on RBA Interest Rate Outlook (James Lovick)

The Australian dollar continues to find support on a growing expectation that the Reserve Bank of Australia (RBA) will have to follow in the footsteps of other central banks and raise interest rates later this year. There is a view that the first rate hike could come as soon as June 2018 and this prospect in my view should help support the dollar. Those clients targeting a rate of 1.80 for GBP AUD may be disappointed although a more realistic level of 1.75 could still be manageable in the coming months on the condition that the pound is boosted on positive Brexit discussions.

Australian data and US data has been slightly mixed of late so it will be interesting to see business confidence figures tomorrow morning from National Australia Bank. Aussie retail sales numbers should also help paint the economic picture down under on Thursday.

Clients looking to buy or sell Australian dollars with pounds should pay close attention to political developments in the UK. The ongoing Brexit negotiations will continue to be a major driving force for GBP AUD throughout 2018. Discussions will now move on to the complicated issue of trade between Britain and the EU and any developments here are likely to see considerable volatility for the pound. Further progress which suggests that there will be a deal between Britain and the EU could see gains for the GBP AUD although the reverse is very true.

Any breakdown in talks is likely to see the pound weaken if it appears the prospect of a deal is moving away. There is currently a reshuffle taking place within Theresa May’s government with more changes expected later today. There are rumours that here may be a ministerial position for leaving the European Union without a deal. This highlights that it could be a rocky road ahead for sterling Australian dollar exchange rates.

To discuss how these events are likely to impact on your currency requirement and to discuss achieving the best rates then please feel free to contact me at jll@currencies.co.uk