Monthly Archives: November 2019

Underperformance Is the Key Word This Week for the Australian Dollar, with QE Predicted in 2020

The Aussie Dollar has been suffering lately, with no luck going into the latter end of this week either. Despite the RBA’s governor Philip Lowe suggesting that QE was not a tool to be used right now, he failed to remove it out of the question altogether and this has instilled fear of QE being utilised in early 2020.

QE Looking Likely for the RBA in the Early Stages of 2020


Economists have tipped QE for the RBA in early 2020. The current target for inflation has not been met and this has thrust the QE or negative rates into the question for the RBA. The markets are beginning to fret whilst the labour market deteriorates despite interest rate cuts from the bank. To rub salt into the wounds of the AUD, the global economy is still dragging its way through a slowdown. However, Lowe stated on Tuesday that extreme policy actions like these will be unlikely for Australia as the AUD growth should pick up next year.

What Would QE Mean for the Aussie Economy?


QE refers to the creation of new money from the RBA in order to buy government bonds and force their yields lower. These yields are integrated into all the interest rates that are charged across economies so when they are forced lower from central banks an indirect reaction of a reduction in borrowing costs for companies and households is also induced. The general idea with this is that low borrowing costs leads to more spending which ultimately can help lift inflation towards a predetermined target. However, in doing so QE means a lower return for investors and a more unattractive currency.

Us-China Trade Talk Looks to Break down Once More, AUD Looks to Suffer


For weeks the AUD has been banking on a successful trade deal between the US and China. Things appeared to be going well recently, but news broke yesterday that President Trump has signed the Hong Kong Human Rights and Democracy Act into law this week which has sparked immediate reaction from China. Investors are now worried that a breakdown could come to light as China sent threats of retaliation to the decision. The AUD is heavily reliant on the Chinese economy and therefore, should the deal not go through, it will likely face losses.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

GBP/AUD Exchange Rate Could Rise to 2.0 Provided a Tory Majority for the Election

GBP’s strength in the upcoming weeks is solely focused on the outcome of the general election on the 12th of December. Analysts have noted that a Conservative party majority would swing in favour of getting Brexit done with a deal and would give GBP a vote of confidence with investors. They also mentioned that there is potential for GBP/AUD to rise to 2.0 should the Tories win the election outright, paired with QE fears surrounding the RBA.

GBP Could Be in for a Positive Boost Should the Conservatives Win the General Election Outright


One of Australia’s top high-street lenders, NAB, noted that the outlook for the Pound Sterling is binary, solely dependant on the outcome of the election. A Tory majority and win would see GBP rise as Brexit would have a better chance of being seen through and done so with an agreed deal. On the flipside, if Labour manage to make up lost ground and win the election, GBP has been forecasted to plummet. Opinion polls have betted a Tory majority as the single most likely outcome of the election, this has left investors with optimism for the December date.

A GBP Boost Would See AUD Slump in the Exchange Rate


Whilst a boost for GBP is great for the UK, this would mean that AUD would likely slump against the Pound in the cross. The Aussie Dollar has been underperforming of late and has done so partly due to the RBA sending off a dovish tone that has investors worrying about future interest rate cuts and QE methods. RBA governor Philip Lowe mentioned that the bank’s unconventional monetary policy is a tool which the RBA has in its arsenal which may at some point be deployed into boosting the Australian economy.

GBP/AUD Rate Could Reach the 2.0 Point, the Outlook for Both Currencies Is Dependent on Various Factors


For GBP, the election outcome will bear the most weight on the currencies performance in the new few weeks and ahead. A Tory majority would likely see GBP rise whilst a Labour majority would likely see GBP slip and let worry start to sink in. For the RBA, it would likely look to reverse some of the dovish comments expressed by RBA governors in recent speeches. In order to do so, AUD will be hoping for positive news surrounding the US-China deal as positive developments in the Chinese economy will likely boost Aussie exports.

For more information on the Australian dollar and assistance in making transfers when either buying or selling Australian dollars please contact me James at jll@currencies.co.uk

AUD Positive Following RBA Dismissal of QE, but Remains Volatile and GBP Slumps

AUD has had no easy road in recent weeks. However, yesterday the Aussie Dollar rose following a dismissal of quantitative easing (QE) from the RBA. Meanwhile GBP retreated in response to recent general election polls.

QE Played down by Governor of the RBA


RBA governor Philip Lowe presented his speech yesterday to the Annual Australian Business Economists Dinner held in Sydney. He emphasised that QE was not on the RBA’s agenda at this point in time. He also elaborated that negative interest rates in Australia are “extraordinarily unlikely”.

These words of optimism gave a slight lift to AUD as investors had worried that QE was a technique due to be used following a previous dovish response from the RBA. Other factors like the inflation targets not being met, the labour market deterioration even with three bank interest rate cuts and the ‘Phase One’ deal between the US and China which still remains unsolved all weigh heavy on AUD and many believe that QE and interest rate cuts may be on the table at some point in 2020.

GBP Retreats in the GBP/AUD Exchange Rate Pairing Following Poor Poll Results for the Tory Party


GBP lost some ground yesterday as new general election polls were released. The results showed that the Tory party had begun to slip and lose its steady majority over the opposition Labour party. The scores from Kantar showed the Tories at 43% whilst the Labour party creeped up to 32% of votes. Economists have suggested that a surprise Labour win would send UK equities tumbling, even with a softer Brexit. Should the Labour party catch up or even surpass the Tories it will likely weigh on GBP as Brexit will not be so much a done deal as Boris Johnson has promised the markets.

AUD Hangs onto Hawkish Response from Dr Lowe Whilst Observing the Us-China Trade


AUD was put in a better position following Lowe’s speech, but the RBA failed to fully rule out the chance of QE or interest rate cuts, instead suggesting that these options were still on the table should Australia experience any rapid increases in unemployment with a decline in inflation. With the comments the gains seen by AUD began to slowly ease back. Investors will be looking to the US-China trade deal for any breaking headlines to suggest the deal is closer to being closed.

Thank you for reading and I look forward to hearing from you soon, Jonathan Watson – jmw@currencies.co.uk

An Edging GBP/AUD Exchange Rate Following Rising Tory Majority Hopes

A new week spells a new opportunity for both the Australian Dollar and the Pound Sterling to attain a boost to their current standings. But with AUD’s recent poor performance and reliance on the US-China trade war deal being completed, a boost is looking unlikely. For GBP, the heavy reliance on its general election outcome next month. A Tory majority appears to be a reassurance that Brexit will be delivered, that is what investors are banking on.

GBP/AUD Rate Edged Higher Yesterday


The GBP/AUD exchange rate edged higher yesterday by 0.4%. The pairing was trending at around AU$1.897, the Conservatives continued to maintain their lead in the polls following the much anticipated release of their manifesto on Sunday.

The deputy director-general of the Confederation of British Industry (CBI) mentioned that a pro-enterprise vision will gain businesses attention, whilst looking to build upon more ambition on areas like access to skills, infrastructure and reaching net zero. The Conservative party are currently in favour with the markets due to their pro-business approach with their policies. GBP/AUD edged yesterday as the response to the new manifesto did not upset the Tory lead over the Labour Party in the opinion polls.

AUD/GBP Rate Sinks, Us-China Trade Deal Becomes Urgent for Australian Economy but Shows Signs of Promise


For AUD, trading has not been positive over the past few weeks. Being in a constant stranglehold for the outcome of the US-China trade war deal, their progress has been limited in the markets. However, the deal once again looks more hopeful, President Trump mentioned that a deal between the two largest economies of the world was ‘potentially very close’. This gave much needed optimism to the trade talks. The RBA’s Assistant Governor gave a speech yesterday and the minutes are eagerly awaited to observe whether a dovish approach has been taken to the economy of Australia. Should this be the case, it is likely that the Aussie Dollar will take a hit.

AUD Could Rise Following Hawkish RBA Commentary


Philip Lowe, governor of the RBA is set to give a speech later today, investors will be hoping that he produces a hawkish tone which will likely buoy AUD on hopes of a recovering economy. Alongside this, any progress being made in the US-China talks will undoubtedly boost AUD/GBP standing. GBP will be looking towards the October BBA mortgage approvals which are set to be released later today, should positive figures be announce GBP will likely favour over AUD in the day’s trading efforts.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

AUD Outlook Looks Optimistic Amidst Recent China Comments and Federal Reserve Meeting

Things were looking up for the Australian dollar yesterday as positive comments from China concerning the trade war drove up the confidence, boosting the AUD. Alongside this, the Federal Reserve (Fed) meeting which took place may have aided sentiments towards the global economy but with the Fed taking a backseat after recent interest rate cuts this could spell bad news for the AUD.

US-China Trade Deal Looks Promising Once More but Trump Refuses to Budge

Since its beginning, the ‘Phase One’ trade deal between the US and China has been rocky to say the least. Several ups and downs have been experienced with each country wanting the best deal possible for themselves. News broke yesterday which highlighted that Chinese Vice Premier Liu He is taking a cautious but optimistic approach to the potential trade deal. He mentioned that China is looking for a deal which would at least end the current conflict between the two countries. A positive deal would fare well for the AUD as it is closely linked with the Chinese economy.

President Trump however looks to shake up the optimism as his recent comments about the trade deal seemed indifferent. He mentioned that despite the progress going “very nicely” with China that the US is taking in billions of dollars as things stand and he admitted that he felt China were not stepping up to the level he would have hoped for. Another comment made by Trump following a tour of the Apple Manufacturing Plant in Austin; ‘We are dealing with China. I have a great relationship with President Xi. They’re a great country, but we’re a greater country than China’ is likely to ruffle a few feathers and sent pessimism sky-rocketing.

Federal Reserve minutes released

The minutes from the meeting that took place yesterday revealed that sentiments expressed in Congress last week were widely held on the Federal Open Market Committee (FOMC) of rate settlers. The Committee came to a consensus that the US monetary policy is “well calibrated” and thus will go forth in taking a material reassessment of the outlook to change that. The near-term driver for the USD will be its deal with China, this would likely support the Dollar outlook which could boost the global economy, benefiting other currencies like the AUD too.

The Federal Reserve hinted that its rate cutting cycle appears to be over for now but this gives way to the ebb and flow of trade-related headlines to be the biggest drivers of currency markets in the time to come. This may not be positive news for the AUD as it is approaching a ‘resistance level’ on the charts which suggests an uphill struggle is ahead, even at the best of times for the Australian Dollar.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

Australian Dollar Makes Strides Forwards Despite Dovish RBA Minutes

Investors in the AUD were pleasantly surprised yesterday as trading concerning the Aussie dollar looked up. Expectations were down on Monday’s pessimistic, dovish minutes which were released by the Reserve Bank of Australia (RBA). The cautious tone was set over the AUD as interest rate cuts looked likely before the years end. Several figures in the RBA had appeared to be open to the idea of another cut soon.

RBA Minutes do not Unsettle the AUD

The RBA minutes reported that the bank is looking to take a dovish approach to its monetary policy. This is following recent underperformance and pressure from US-China trade talks. However, news that broke out yesterday was positive for the AUD. Reports suggested that the Australian dollar reversed its earlier losses which were caused by the surprise dovish comments in the RBA minutes. The AUD has rallied, especially so once the London trading session opened. This provides a positive outlook for the AUD despite recent poor performances in the market.

GBPAUD Rate Steady but Prepared for Volatility

The GBPAUD interbank exchange rate was trading at around AU$1.8935 yesterday, which by recent figures is a steady rate. The risk-sensitive Australian dollar is still heavily under pressure from the US-China trade talks however. The volatility of the talks has caused fluctuations for the AUD over the past weeks.

A negative downward pressure was placed on the AUD after President Trump suggested that the US may raise tariffs even higher if a ‘Phase One’ deal could not be reached between the two. This threatening approach has not filled investors with optimism, but US representatives were hopeful, suggesting that if their negotiators felt the deal was hopeless, they would have stopped already.

GBP Struggles Against AUD Following Tuesday’s Live Debate

Wednesday was a difficult day for the GBP after it failed to edge above the AUD following Tuesday night’s live election debate between Prime Minister Boris Johnson and Labour Party leader Jeremy Corbyn. Neither leaders came out ahead of the other and failed to instil faith that the Conservatives would hold a majority in December. To add to this, a flash poll from YouGov displayed a modest majority for the Tories at 51% to 49% but this was not enough to buoy the market confidence in the GBP.

Despite the Conservatives slight lead over the Labour Party, the performance from the live debate only emphasised political concerns involving the likelihood of a Tory majority come December 12th. Analysts did mention that the GBP was not significantly affected by the debate and could have been swayed much more should Jeremy Corbyn have gained an advantage in the polls.

For more sterling and Australian dollar news or if you have a currency requirement you can get in touch with me, James Lovick, directly at jll@currencies.co.uk, or call +44 (0) 1494 360 899 to discuss these factors in more detail.

Dovish Reserve Bank of Australia Sinks AUD Rates Leaving Investors Unsettled

The outlook for the AUD was looking to the Reserve Bank of Australia (RBA) meeting which occurred yesterday. The current trend of the AUD looked as if the RBA would take a ‘dovish’ approach to their monetary policies. Investors had hoped that this would not be the case as the currency would lose momentum. As the minutes were released from the meeting yesterday this seemed to be exactly the case.

Sharp Retreat For Australian Dollar

The Reserve Bank of Australia’s minutes were released yesterday, which caused a sharp retreat of the AUD in the market. The meeting, which covered monetary policy, showed a bank that was still poised to cut interest rates despite current record lows. The key official cash rate was left at 0.75% but the minutes revealed that the possibility of another cut could not be ruled out.

Likelihood of a Further Interest Rate Grows

With the findings of the minutes from the RBA, it is more likely than ever that interest rates will be cut to a new record low before long. Policymakers in the meeting saw a clear case for the fourth rate cut of 2019, but have decided to wait and observe the effects of previous rate cuts before moving forward. The bank highlighted that only gradual progress has been made so far which gave reasoning to potential future cuts. The minutes also revealed that whilst members has judged that lower interest rates were supporting the economy, they also noted the possible negative impacts of lower interest rates on savers and for confidence in the AUD.

GBPAUD Interbank Exchange Rate Slumps Amidst RBA’s ‘Dovish Tilt’

Reports have suggested that the pound to Australian dollar exchange rate had slumped following the news of a ‘dovish’ RBA. The Aussie dollar edge up against the pound despite the proposed considerations of another rate cut. The trading rate was around AU$1.8953 yesterday. The GBP will be hoping for a boost following the YouGov poll, released after last night’s live head-to-head debate between Boris Johnson and Jeremy Corbyn. The pound continues to edge higher on hopes that a Tory majority will be achieved in December’s elections.

In regard to today’s outlook, the AUD could surrender some of yesterdays gains following the release of Westpac’s Leading Index. Should the index slump it could weigh on the AUD. Meanwhile for the GBP, if the polls suggest further support for the Conservatives it will likely give a further boost to the pound sterling.

If you are in the process of buying or selling Australian dollars and would like a free quote then contact me directly, Tom Holian, I look forward to hearing from you. teh@currencies.co.uk

GBPAUD Outlook Rates Break 1.90

To start the week the GBPAUD interbank exchange rate has rallied higher, with rates bursting through the 1.90 range for the pairing. The pound looks like it has started the week off on the front foot, making gains against all major currencies. This is despite the impending general election, which could be set to stir up some uncertainty. Meanwhile, Aussie employment data disappointed and sent the currency on a further downward spiral.

UK GBP Data Disappoints But Doesn’t Inflict Damage on the Driving Force

The UK’s Gross Domestic Product (GDP) data was recently released, the figures were lower than expected at 0.3% (with an expectation of 0.4%). The ongoing Brexit uncertainty has had a minute effect on the GBP exchange rates over the past few years. However, the weak data did not alter the course of the Pound Sterling to Australian Dollar exchange rate as the prospect of a Torie majority is currently the main driving force for the GBP. The current polls have placed Boris Johnson with a slight majority but volatility is expected and the outcome of the elections could swing either way.

Australian Employment Data Returns Poor Values, Adding Salt into the Wounds

An already struggling Australian dollar was hit with more bad news to start the week. The unemployment figures came back at 5.3%, rising from 5.2% previously. This negatively impacted the Australian economic outlook and disappointed the markets. The Reserve Bank of Australia (RBA) have previously cut interest rates three time this year and do not plan to make any more until at least 2020. Attention is turning to today’s (Tuesday) Reserve Bank of Australia (RBA) minutes which will likely offer some insight into the banks standpoint on future monetary policies.

AUD Waits for US-China Breakthrough for a Boost of Optimism, Whilst GBP Clings to Tory Majority

The struggling AUD is facing a slump as its traders await positive news from the US-China talks. The US appears firm on its mention of only agreeing to a deal that is positive for the US. This is likely to be what has caused a recent slow on the trade deal progress. Little information has broken from either camp and so investors are left twiddling their thumbs. Meanwhile, those investing in GBP will be hoping that recent news that a Tory majority is likely to be the outcome of December’s election, in a bid to keep the optimism behind the GBP rolling. The findings from the RBA’s minutes in today’s meeting will be telling of the future for the AUD and its monetary policy. There is a chance that they may take a ‘dovish’ turn to try to recover the falling currency.

For more pound and AUD news, keep up to date with our daily blogs. Alternatively, if you have a currency requirement you can get in touch on +44 (0)1494 416 503 to discuss these factors in more detail or contact me directly at dcj@currencies.co.uk.

GBP/AUD Interbank exchange rate looks set to rally in a bid to avoid upcoming pressures

Both the pound and the Australian dollar have faced issues over the past couple of weeks which have consequently negatively impacted their currency strengths. There are ongoing concerns surrounding the GBP and the UK’s Brexit campaign that has kept investors guessing. The AUD on the other hand is facing a barrage of damages, with US-China trade talks losing traction paired with recent under-performance in economical data captaining the ship of decline.

Both Currencies in a Sorry State to Start the Week

Last week saw an unpredictable sway for the pound, with October’s UK retail sales declining and annual sales seeing the weakest increase in a year and a half. Added to this, the UK’s inflation had slumped to a three-year low. The GBP did pick up a little in the week thanks to some political optimism; signs that the conservatives may pull through and win the election in December gave a boost to the currency.

Meanwhile, for the AUD, a poor performing annual wage growth and an unfavourable consumer sentiment begin to weigh on the Australian dollar. The optimism previously associated with the US-China trade talks declined as the US looked unlikely to agree on a deal unless it was fitting for them. This brought down the value of the AUD, which is heavily affected by the strength of the Chinese economy due to their extensive trading. Australia also suffered its sharpest decline in three years, which has sparked calls for action to help alleviate wages and economic activity.

GBP Looks to Slide Following Bank of England Inflation Report

The Bank of England is set to release its inflation report on Wednesday, and analysts have predicted that the GBP will slump against the AUD following its release. Optimists however suggest that the pound could rise against the Aussie dollar should surveys report back in favour of the Conservative Party reclaiming power in December, which would increase the chances of the UK leaving the EU by the end of January.

Dovish Reserve Bank of Australia Could Weigh on the AUD Exchange Rates

The RBA’s Assistant Governor, Christopher Kent is set to make a speech at the start of this week. There is potential for the AUD to slide against the GBP. This will likely occur if he emphasises the weakness of the Aussie economy and moves towards a ’dovish’ monetary policy. Flashing forwards to Thursday, the AUD could claw back some gains as the Commonwealth Bank services Purchasing Manager’s Index (PMI) is released. If November’s PMI rises are higher than expected, the AUD is likely to rally.

Investors in the AUD will be hoping for a positive response from Thursday’s PMI alongside more positive news from the US-China trade talks. If both proceed in a positive manner there is a chance that the AUD can lift itself out of its current sorry state and reclaim some of its previous gains.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

Sinking Trend Continues for Australian Dollar Following Unemployment Figures

The AUD continued to underperform yesterday, with the jobs data bringing bad news for the economy and the currency itself. The poor performance of the Australian economy could be leading the AUD down the path of another future rate cut from the Reserve Bank of Australia (RBA).

Jobs Figures Turn up a Surprising Number, but it Was Not in favour of the AUD

Investors were left deflated on Thursday as the awaited jobs data for Australia was released. There were optimistic hopes for the data and the potential boost it could give to the troublesome Aussie Dollar. But with this, there were also fears that disappointing figures may bring about further decline for the currency. Much to the investor’s disappointment, the latter was exactly the case.

The jobless rate rose to 5.3% from 5.2% in October, with 19,000 jobs being shed last month. The market had looked for a 16,200 gain as a measure to keep the jobless rate steady at its previous level. This data shocked many and was certainly not welcomed with open arms by the Reserve Bank of Australia (RBA). To add salt into the wounds, poor retail sales and industrial production figures were released from China. The Chinese economy is important to Australia’s economy and currency outlook given the significant trading between the two.

RBA Weighs up its Options Before Making Any Further Cuts

The RBA has been under pressure lately with the underperformance of the AUD. It has already cut its interest rates three times in 2019 and appears to want to keep it that way. However, the pressure is building, and experts are hinting that a cut may occur in early 2020. The RBA has proposed that it will “wait and see” what the effects of previous cuts are before making any more, with rumours that this may suggest it could be around February 2020 before cuts are made again.

Outlook For AUD Looks Bleak as GBP Gains Against AUD

The pound gained against the Australian dollar early yesterday morning, which pushed the GBPAUD interbank rate to some of the highest levels seen in the past 3 years. The rate reached around 1.9018, and the GBP mainly has the AUD’s weakness to thank for this. The disappointing jobs figures have only weighed further on an already declining Aussie dollar.

Financial markets are now expecting another 0.5% interest rate cut by the RBA in February 2020. The likelihood of this is quite high following recent underperformance. Investors will be eager to observe the cards played by the RBA in the upcoming months.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.