Daily Archives: May 24, 2018

Australian Dollar Wobbles on Geopolitical Concerns – US / North Korea (James Lovick)

The Australian dollar has seen another wobble after that has been a good performance from the Aussie over the last month. The Aussie has slipped lower on the back of developments stemming from both China and North Korea. The trade war between the US and China appeared to be cooling off which was working in the commodity currency’s favour although Trump was reported to have said that “There is no deal” signalling that there might not be an agreement on how to reduce the size of the US deficit with China.

There are mixed signals coming out of the US on this important matter and there did appear to be progress up until recently. The Australian dollar is directly impacted by these events as China is Australia’s largest export market and a slowdown in the global economy is generally seen as bad for the Aussie.

It’s not just the US China trade battle to consider though, US President Donald Trump has indicated the summit with North Korea may not happen with a strong chance that it won’t work out. These geopolitical concerns continue to have a negative impact on the Aussie so expect more volatility for AUD exchange rates in the coming weeks.

Selling Australian Dollars for Pounds?

Those clients with pending requirements should monitor developments in Britain over these coming weeks. I have posted previously that the House of Commons will shortly vote on the Brexit withdrawal bill that has been put forward by the House of Lords with a series of amendments. UK Prime Minster Theresa may does not have a sufficient majority to push through her vision of Brexit and if the amendments are defeated in the Commons then there could be a vote of no confidence in the Prime Minister. This could create considerable volatility for the pound on the back of political uncertainty. It could also end up in a general election.

Clients looking to sell Australian dollars could see some better opportunities around the corner although it is my view the Prime Minister may have a shot at putting pressure on other politicians who represent Leave backing areas of the country. If she is able to win votes from Labour politicians then she could sail through with her Brexit which could see the pound rally on renewed confidence. Clients would be wise to plan around this event in these coming weeks as there is a huge amount at stake on how this ends up for GBP AUD.

To discuss your currency requirement and for assistance to achieve the best rates of exchange then please get in touch with me James at jll@currencies.co.uk

GBP/AUD could be set to fall further after UK inflation unexpectedly drops

Bets in favour of the Bank of England hiking interest rates in the UK this year slid yesterday, after the UK inflation data released showed a drop in the cost of living in the UK.

Markets weren’t expecting this, and the Pound’s trend appears to have reversed after losing almost 10-cents against the Australian Dollar over the last month or so.

The markets had expected to see an interest rate hike two-weeks ago today after the UK economy had been showing some positive signs, but the drop in economic growth (its fallen to a 5-year low according to the latest GDP figures) has put the brakes on these plans.

Some economists are now predicting that it may not be until November this year until the next hike happens and that will of course be determined by how the UK economy performs.

There haven’t been a lot of reasons for the Aussie Dollar strength and I think the recent price changes can be put down to the Pound’s weakness. There aren’t expected to be any rate hikes down under this year and the Australian economy has also demonstrated signs of a slowdown.

The current GBP/AUD level is trading at a 2-month low, and if you wish to be updated in the event of a spike in the price do feel free to register your interest.

If you have a large 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 (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.