Category Archives: AUD to GBP

US/China Trade War and Brexit dictate GBP/AUD (Daniel Johnson)

Progress in US/China talks

Due to Australia’s heavy reliance on China purchasing its goods and services any fall in growth from China has an impact on the Australian economy and in turn the Australian Dollar.

The US/China trade war is a huge concern amongst investors, a trade war between the world’s two largest economies has huge implications. The Trump administration wants China to change its economic strategy, something Chinese President,  Xi Jinping will be reluctant to do. The changes that are being asked for would hit the Chinese economy hard and  long term. It may be the case that the Chinese will try and give very small concessions in  bid to lengthen the trade war and out last Trumps reign. A dangerous game considering the US has threatened to increase tariffs to 25% should their terms not be met. 25% is a huge increase and if China retaliate both economies will suffer not to mention the global impact.

At present, trade talks seem to be progressing well.  When asked about how talks were going yesterday in Beijing, US Treasury Secretary , Steven Mnuchin replied “so far so good.”

If it were not for the lack of clarity surrounding Brexit I think Sterling would be making gains against the Aussie. Although, the pound could lose value as negotiations with Brussels intensify I think the likely outcomes are either an 11th hour deal or an extension, both of which could cause significant Sterling strength. Morgan Stanley recently suggested there was less than a 5% chance of a no deal scenario. The market moves on rumour as well as fact so due to a no deal Brexit being largely factored out of the equation at present, if it were to occur expect  a large drop in the pound as this outcome is definitely going against the grain.

If you have a currency requirement I will be happy to assist. If you let me know the details of your trade I will endeavour to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.
If you already have a currency provider in place. Drop me an email with what you are being offered and I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with a Foreign Currency Direct PLC, a firm trading for over 18yrs and FCA registered.If you would like my help feel free to email me at dcj@currencies.co.uk.

AUD Forecast – What are the Current Factors Affecting GBP/AUD Rates? (Matthew Vassallo)

The AUD has seen its value slip against the Pound over the past week, falling back below the key threshold of 1.80.

GBP/EUR rates were trading above 1.82 yesterday and despite the AUD finding some support around this level, it has yet to threaten any significant realignment against the Pound.

As regular readers will know, much of the current market sentiment and ultimately investors risk appetite on GBP/AUD, is being driven by the prospect of a no-deal Brexit with the EU. Whilst the UK government and Brussels are yet to agree upon the final transition, there is still hope that a deal will be in place prior to the deadline of March 29th, the date by which the UK must exit the single bloc.

Whilst Brexit uncertainty has proved a major handicap for the Pound for a prolonged period, it is also likely to have helped to support the AUD, at least to some extent, during a period of deep economic instability for the Australian economy. In fact, due to the major slowdown in global trade, brought about partly because of the escalating trade stand-off between the US & China, the AUD could have expected heavier losses against GBP, than it has experienced up until this juncture.

The AUD, like all commodity-based currencies, relies heavily on a buoyant global market to proper. In years gone by it has always been considered a riskier asset, which in times of global growth can bring about quick returns due to the generally bigger market swings and at one point higher yields due to an attractive interest rate.

Of course, the flip side brings with the potential of heavy losses and with interest rates now at record lows for a prolonged period, the AUD is not as an attractive propositions as it once was for investors.

If the UK and EU to agree upon a Brexit deal over the coming weeks, then the market spike could be favourable for the Pound. I would anticipate that the AUD could see heavy losses in the short-term, with a move back above 1.85 likely and the pliability of a run at 1.90 distinct possibility.

If you do have a GBP or AUD currency exchange to make, it is key to try and minimise your market risk in such an uncertain climate. Here at Foreign Currency Direct plc we can help you guide through this turbulent market, providing key insights and up to date market analysis.

We can help you maximize your currency exchange by providing award winning exchange rates and a pro-active approach to currency transfers.

Please feel free to contact me directly on mtv@currencies.co.uk, or alternatively you can call the office on 0044 1494 787 478.

US China Trade War Intensifies (Daniel Johnson)

AUD losing investor confidence

Australia is heavily reliant on China purchasing its goods and services. Any fall in Chinese growth has a knock on effect on the Australian economy and in turn the Australian Dollar.

The US China trade war is a serious concern for investors and it is pushing them away from riskier commodity based currencies such as the Australian Dollar. The US and China are currently in talks and the Trump administration wants China to make fundamental  changes to its current economic strategy.

If China were to make some of the changes requested it would have serious implications on the Chinese economy. Chinese President, Xi Jinping knows this and it may be the case that he will try to make as little concessions as possible in an attempt to outlast Trump’s reign.

It is a risky game considering the US has threatened to increase tariffs by 25% on $200bn worth of goods. The US has said they will implement the tariffs if the two sides fail to make progress by 1st March.

According to a UN trade agency report Asian countries would be the most effected. The implications of such an increase should not be understated. With two super powers trading blows the effect will be wide reaching and will hit the global economy.

The Australian Dollar could be among the hardest hit until we have a resolution, which could be some way off, AUD will remain fragile.

If it were not for the lack of clarity surrounding Brexit I think we could see some decent gains for Sterling against the Aussie, unfortunately the uncertainty over Brexit is outweighing concerns down under and the Pound continues to be anchored at low buoyancy levels. There are alternative options to May’s deal being put forward, but there is still no firm way forward. May’s intention is to gain concessions from Brussels that will be accepted by parliament. She has already attempted to this in December after delaying the initial vote. May was stone walled by Brussels and European Commission President, Jean Claude Junker has continually stated there will be no concessions made. Many still believe a deal may be struck at the 11th hour, but Brussels have stuck to their guns up until this point. The PM is currently in a worse position than in December following the diminishing probability of a no deal scenario (one of her only sources of ammunition) with Morgan Stanley predicted there is less than a 5% chance of a No deal Brexit.

If you are looking to move GBP – AUD short term aim for the 1.83s.

During such unpredictable times you need an experienced broker on board if you wish to maximise your return. If you have a pending currency transfer let me know the details of your trade I will endeavour to assist. There is no obligation to trade by asking for my help, I will provide a free trading strategy to suit your individual needs. If you do wish to try our service you can trade in the knowledge we are a no risk entity, as we do not speculate. Foreign Currency Direct PLC has been in business for over 18yrs and we are registered with the FCA. If you already use a provider I can perform a comparison within minutes and I am confident I will demonstrate a considerable saving. I can be contacted at dcj@currencies.co.uk.

 

 

 

AUD Forecast – Heavy Losses for the AUD Overnight as Interest Rate Hike Looks Extremely Unlikely (Matthew Vassallo)

The Pound has made significant gains against the AUD overnight, gaining almost three cents.

It currently trading at 1.8176, having been marooned below 1.79 during the early part of the trading week.

What’s surprising is that this improvement has come about despite the on-going uncertainty surrounding the UK’s impending Brexit, with talks between the UK and EU once again seemingly at an impasse.

This indicates that last night’s heavy losses for the AUD were linked to a sharp drop in investor confidence in the AUD, rather than any major influx into the Pound.

This means those clients holding GBP and looking to buy AUD have been given a window of opportunity, which equates to an additional 3000 AUD on a 100k GBP/AUD currency exchange.

The reason the AUD lost significant value is likely linked to comments made overnight by the governor of the Reserve Bank of Australia (RBA) Philip Lowe, who indicated that the central bank were unlikely to raise interest rates anytime soon, meaning that they will likely be kept at record lows for the foreseeable future.

The Australian economy was already under pressure due to the current trade standoff between the US and China. With no long-term solution in sight, despite rumours that President Trump will meet his Chinese counterpart Xi Jinping this month, the outlook for the AUD does not look overly positive.

Australia relies heavily on trade with China and with China’s demand slowing, this will inevitably have a negative impact on the Australian economy and ultimately the AUD.

With a slowdown in global growth also impacting commodity-based currencies such as the AUD, how GBP/AUD rates will evolve over the coming weeks and beyond, will depend much on whether or not the UK can ultimately agree a Brexit deal with the EU.

If the UK fails to do this, then the AUD is likely to be inadvertently boosted by a sell-off of GBP positons.

If you have an upcoming 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 winning 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.

Australian dollar mildy firmer after RBA Meeting!

The Australian dollar has been mildy firmer after the RBA, Reserve Bank of Australia, kept their interest rates on hold overnight. The expectations for the RBA is to have moved their outlook to a slightly more dovish tone but overall they kept up their current viewpoint, which is essentially that they will keep interest rates on hold for now.

The RBA did cite increased global risks, which could lead to a lower economic outlook in the future. This might well prove indicative for future Australian dollar weakness, there is now increased expectations that the longer term future for the Australian currency remains subdued. However, for now, as the RBA are not directly forecasting a rate cut, the market is likely to err on the side of caution.

In other news overnight the latest Australian Retail Sales figures weighed slightly on the market, coming in slightly worse than expected. This could be another sign of what the future might hold and be an indicator that the Australian dollar might in the future be struggling.

Some of the downside risks for the currency include global events such as the Trade Wars with China, and also recession in Italy. With the IMF recently having downgraded global growth, we could see the Australian currency lose value longer term if global confidence does not improve.

I expect the Australian dollar to weaken longer term and think clients looking to sell the currency would be better to move sooner than later, to avoid the risk of any losses. The Australian currency is effectively a barometer of sentiments on global trade and with those sentiments likely to suffer further, it seems likely the currency will fall in the future.

Next week is a series of Australian releases, including Home Loans and also some Chinese data. With Chinese economic news weighing on the economic outlook for the region, clients with Australian dollars to sell might wish to take advantage of the more recent improvements and lock in their gains.

Thank you for reading and please let me know if you have a transfer that we might be able to help out with, or you wish to discuss.

Jonathan Watson

jmw@currencies.co.uk

 

GBP to AUD Rates Find Support above 1.80 (James Lovick)

Rates for pound to Australian dollar have found support at the start of this week after a drop off in the GBP to AUD pair at the end of last week. Brexit continues to be the main driver for sterling exchange rates and is creating considerable volatility for the GBP vs AUD pair. The pound has made reasonable gains in recent weeks as the markets remain optimistic that a no deal Brexit appears to the less likely outcome and that there is still hope from all sides that a deal will be reached between the UK and EU. Until some certainty is offered however the pound is unlikely to make any material gains against the Australian dollar. The next important date in British politics is the 14th February where another vote will be held in the House of Commons.

The Reserve Bank of Australia meet this week to discuss interest rates and future monetary policy although expectation is that there won’t be any change in the base rate this time round. Economic data in China is likely to have more sway on the future of the Australian dollar. The ongoing trade war between the US and China continues to raise concerns for the global economy and this ultimately has a knock on effect on the Australian economy and the Aussie dollar.

Manufacturing numbers from the Purchasing Managers Index have disappointed the markets once again and any further deterioration could see Australian dollar exchange rates come under renewed pressure. Services data on the other hand also from the Purchasing Managers Index survey have been steady giving some hope for this sector. Any major market movement is likely to follow from any trade agreement that is reached between the US and Chinese leaders. There are reports that there may be a meeting between US President Donald Trump and Xi Jinping in Vietnam at the end of February. A way forward to break the deadlock in trade negotiations could prove very beneficial for the Australian dollar.

For more information on the Australian dollar and for assistance in making transfers at the best rates of exchange then please feel free to contact me James at jll@currencies.co.uk

Australian dollar at the mercy of global news!

The China – US Trade Wars have been a major factor driving the currency markets in the last 6-9 months, impacting the Australian dollar and the economy. Australian economic data has been mixed but with Chinese data reflecting a slowdown, particularly in Manufacturing, the Australian dollar has been softer.

Looking ahead there is lots of important news in the currency markets this week to move the Australian dollar, this includes information at home and abroad. Domestically we have the latest Australian CPI, Consumer Price Inflation, data to move the market. The Australian economy has been mixed and investors are still debating the prospect of interest rate hikes in the future.

Tomorrow is also important with the latest US Federal Reserve interest rate decision, which could be a market mover on the US dollar and thereby impact the Australian dollar. USDAUD is the most heavily traded pairing for the Aussie and any large movement on the USD can ‘weigh’ the Australian dollar down against other currencies.

Later this week we have the latest US-China trade war talks which could be a market mover in the future, clients with any AUD transfers should be keeping a very close eye on the latest news. The meeting this week might yield too much news since there is still a 1st March deadline for the talks to be finalised.

Finally, Friday is the latest US Non-Farm payroll data which might well trigger volatility on the Australian dollar, by altering global attitudes to risk and viewpoints on global trade. Clients looking to buy or sell the AUD should be very conscious of these developments which should see a very busy end to the week for the Australian dollar.

If you have a position buying or selling and wish to get a fresh update o the market and all the important issues driving your levels, please do get in touch to discuss the latest news with me Jonathan Watson.

Thank you for reading and I look forward to hearing from you.

Jonathan Watson

jmw@currencies.co.uk

GBP to AUD Rates before Key House of Commons Vote on Tuesday (James Lovick)

The pound to Australian dollar exchange rate has risen over the last week with rates for the GBP to AUD pair sitting above 1.83. The pound has benefited considerably from the markets beginning to feel more optimistic that a deal between Britain and the EU will be reached whilst the prospect of a no deal has been diminishing, for the time being.

With the Australian markets closed today for Australia day, tomorrow will be crucial in determining where rates for GBP vs AUD head next. Key parliamentary votes will be held in the House of Commons at 7pm tomorrow and it will be for the Speaker John Bercow to select which of the amendments the House will vote on. There are two amendments in particular and whether they are selected could help shape the direction for travel for GBP to AUD with currency volatility to be expected.

The Nicholas Boles / Yvette Copper amendment seeks to delay Article 50 in the event that a deal cannot be reached. It effectively removes no deal from the table as we approach 29th March. The other amendment which appears to have the support of government is the Graham Brady amendment which seeks to remove the controversial Irish backstop and replace it with alternative methods should an agreement on future trade not be reached.

These amendments are hugely important as they will help determine the path of Brexit and where it ultimately ends up which is of huge interest in the currency markets. Those looking to buy or sell Australian dollars will likely see a big market reaction on the outcome of tomorrows vote and could be presented with a good opportunity.

Bank of England Governor Mark Carney will be making a speech later today which could create some volatility for the pound ahead of such an important day tomorrow. Tomorrow sees business conditions data down under from National Australia Bank whilst Wednesdays’ Consumer Price Index inflation data could also help direct the Australian dollar.

For more information on the Australian dollar and for assistance in making transfers then please feel free to contact me James at jll@currencies.co.uk

GBP to AUD Finds Support – 66 Days to Brexit (James Lovick)

The pound to Australian dollar exchange rates has found support over 1.80 on the back of the latest Brexit developments which have helped lift sterling. The Australian dollar has also come under pressure over ongoing concerns for the Chinese economy. Chinese Gross Domestic Product figures released yesterday exacerbated the situation after China reported its lowest growth since 1990.

As the second largest economy in the world any downturn in China is closely scrutinised by the markets and the Australian dollar is heavily influenced as a commodity currency. Considering the size of Australia’s export market to China then any slowdown in the Chinese and global economy will normally be felt in Australia too. The Australian dollar could now be set for a weaker period ahead especially if trade tensions between the US and China over trade continue. US President Donald Trump has called on China to “stop playing around” and do a trade deal.

Brexit meanwhile continues to bring uncertainty for the GBP to AUD pair. UK Prime Minister Theresa May updated the House of Commons yesterday signalling the next steps having been defeated on a historic scale last week to include returning to Brussels to seek a better deal. The Labour party have tabled an amendment to try and force a second referendum, what is often referred to as a peoples vote, something the Prime Minister is not supporting having highlighted risk to social cohesion. Potential government resignations have also been reported if ministers are banned from voting for any amendments aimed at stopping a no deal Brexit.

UK employment data are released this morning and any improvement in wage growth numbers are likely to be seen as welcome news for the economy and hence the pound. Market reaction is likely to be limited with bigger Brexit news. For the pound to move higher and break away for these lower levels there does need to be some certainly over Brexit and these next few weeks will likely create major volatility and potential opportunity as the exit date of 29th March approaches.

For assistance in making transfers either buying or selling Australian dollars then please get in touch with me James at jll@currencies.co.uk

Will the slowdown in China put pressure on the Australian Dollars value?

The main news within the financial markets this morning is the release of 4th quarter Gross Domestic Product from China. The figure is followed closely owing to its importance, as the Chinese economy is the 2nd largest globally and GDP data measures economic output.

The figure released is 6.4% year on year in the forth quarter, and this was expected. The headlines will centre on the annual figure which is now officially 6.6% through 2018 which is the lowest figure on record since 1990, almost 30 years ago.

Now that the annual GDP figure has been released the concerns surrounding a slowing Chinese economy have been confirmed, and this could spell trouble for the global economy with economies such as Australia’s likely to feel the pinch considering the extent to which the Australian and Chinese economies are intertwined. The negative effects of the US-China trade war can now been seen so hopes of a deal being stuck will be a high as ever, and it’s likely that the talks could impact AUD exchange rates as AUD could react to US-China sentiments.

From the UK side, this afternoon could offer GBP exchange rates some direction as UK Prime Minister, Theresa May will announce the governments Plan B now that her deal hasn’t made its way through parliament. The pound has dropped off slightly at the beginning of this week which is likely due to the anticipation of what will be said later. For now, cross party discussions have come to a halt as the leader of the opposition, Jeremy Corbyn has stated that we won’t talk until a no-deal is ruled out.

I think that this afternoon’s announcement is likely to drive GBP exchange rates to begin with and that the Irish backstop will be a major talking point regarding the new plan.

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.