Category Archives: Australian Dollar Forecast

GBP/AUD – Where Next? (Daniel Johnson)

Brexit Extension

Since December the Pound has been losing value against the Australian Dollar. Sterling reached its highest level against the Aussie yesterday since the 2016 referendum. This was following the news that a Brexit no deal had been taken off the table until 29th March combined with the news that MPs have now voted to extend Article 50 in order to come up with a mutually acceptable deal between the UK and the EU.

The Australian economy is currently experiencing problems which is proving to be another catalyst for the rise in GBP/AUD. Consumer confidence, business confidence and housing loans data all showed a decline. Australia’s heavy reliance on China purchasing it’s goods and services is hurting the Aussie as Chinese growth, although still impressive has slowed quite considerably since the US/China trade war commenced. It was announced yesterday that China’s industrial output fell to its lowest level in 17 years during the first two months of 2019, unemployment has also been on the rise. There is the potential that Chinese President, Xi JinPing and US President, Donald Trump could come to an agreement at the end of the month and cease tariffs which could boost investor confidence and in turn strengthen AUD.

Will the RBA minutes give an insight into future Monetary Policy?

Although Brexit will continue to be the key driver on GBP/AUD there are plenty of other factors that can have an impact on the currency pair. On Tuesday morning, during the early hours the Reserve Bank of Australia (RBA) will release minutes following the recent interest rate decision where rates were kept on hold at 1.5%. The RBA have already hinted at potential rate cuts and if this is mentioned again we can expect further Australian Dollar weakness.

Next Thursday has the potential to cause market movement with the release of RBA Bulletin and unemployment figures for February. If the data arrives away from expectation expect volatility.

Personally, I think the Aussie could be in for a tough time due to the increasing problems surrounding the economy, I haven’t even touch on the housing price bubble. If it is announced there is a deal on the Irish Border I would expect significant Sterling strength. I feel Pound is currently chronically undervalued. If I was sitting on Aussies I would not be hanging around for improvements considering risk versus reward.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 18yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving. I can be contacted at dcj@currencies.co.uk .

 

 

 

 

 

No to a no deal Brexit and the impact on the Australian Dollar

The Pound has hit a 2 1/2 year high against the Australian Dollar after the House of Commons voted in favour of saying no to a ‘no deal’ Brexit.

MPs will now be voting later on today to ask the European Union for permission to delay Brexit after the 29th March which is the the current expected date when the UK is due to leave the European Union.

Owing to what happened last night, once or indeed, if an extension is granted this could carry on for a long period of time according to Prime Minister Theresa May.

The Pound has moved in an upwards direction against a number of different currencies including against the Australian Dollar and we could see further gains later today if the vote goes the right way.

Theresa May has also warned that if her deal is not voted through next week then an extension would need to be very long and I think this could provide the Pound with support as it means trade with the UK can breathe a sigh of relief at least for the foreseeable future.

In my opinion the longer the negotiations last means that I think negotiations will continue to be in stalemate and this could inevitably result in a call for a second referendum.

Clearly there is little appetite at the moment for this to take place but if there is no headway made over the next few months with the talks then this could be one of the only options left.

The Australian economy is feeling a lot of pressure at the moment owing to the slowdown in China with Chinese GDP at 6.6% which is the lowest level in 28 years.

Australia is heavily reliant on Chinese demand and with Australia exporting a third of their goods to China then any slowdown will typically have a negative impact on the value of the Australian Dollar and this is what appears to be happening at the moment.

Having worked for one of the UK’s leading currency brokers since 2003 I am confident of being able to save you money on exchange rates compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Could the Australian dollar weaken further?

The Australian dollar has been weaker in the latest few weeks as investors fears over the Trade Wars remain, plus the expectations on the RBA, Reserve Bank of Australia, increase to potentially cut the interest rate in the future. There has been a growing expectation that perhaps the Australian central bank has been under estimating the extent to which they would need to cut interest rates in the future, based on the ever-changing global developments. If you are looking to buy or sell Australian dollars in the coming days and weeks an awareness of all of these options and outcomes is sensible.

The market is looking like it could be in for a rollercoaster ahead for the Australian dollar as a series of events develop overseas and at home to trigger volatility. One of the key aspects of the Trade Wars is that in disrupting global trade, they are putting pressure on the global economy which will ultimately lead to a weaker Australian currency. Australia’s economy is heavily reliant on the global economy performing well which will support strong demand for the export of their raw materials.

Overall, there is a belief that the Australian dollar is destined to lose value over the longer term, this is evidenced by its recent weakness which will only continue should the market continue to be faced with the evidence of a slowing global economy.

There is important economic news ahead for the Australian dollar with key information released this week on Consumer Inflation Expectations and National Australia Bank Business confidence figures. This will all be seen in the light of the ongoing developments with the US and China trade wars which had been more positive, but just lately have seen uncertainties creep back.

If you have an important currency transfer to make, being prepared is key in this market where events can quickly and suddenly change and unfold. If you would like to run through or discuss the market or our services, then please do not hesitate to get in touch to discuss further.

Thank you for reading and please contact me Jonathan on jmw@currencies.co.uk.

Will the Pound increase after the Brexit vote next week?

The Australian Dollar has continued to struggle recently against the Pound hitting the best rate to buy Australian Dollars since June 2016 this week.

Since the lowest point in December the Pound has improved by as much as AUD14,500 on a currency transfer of £100,000 highlighting the importance of keeping up to date with current events both in the UK and Australia.

The Reserve Bank of Australia have continued to remain in a rather neutral position concerning monetary policy by keeping interest rates on hold earlier this week.

The Australian economy has continued to show signs of concern during recent months and this is clearly being reflected in what is happening with the Australian Dollar at the moment.

The Australian economy is also heavily reliant on both growth and demand in China and with the world’s second largest economy slowing down this is causing the Australian Dollar to weaken.

Problems with coal coming in to China from Australia have hit the headlines recently and it appears to be only directed at Australia rather than other countries who trade with China so is this a political move by the Chinese who are maybe punishing Australia for their support to the US concerning the recent Trade Wars between the US and China?

Turning the focus back towards what is happening in the UK and we have a number of key votes due to take place in the House of Commons surrounding Brexit.

On March 12th the House of Commons will hold their ‘meaningful vote’ about what MPs think of the current Brexit deal on offer. The likelihood is that it will be voted against and this means the following day will see a vote on whether or not MPs will back a ‘no deal’ Brexit.

Therefore, I expect a huge amount of volatility on GBPAUD exchange rates and could this see the Pound break past 1.90 against the Australian Dollar.

I have worked for one of the UK’s leading currency brokers for over 16 years and I’m confident that I can save you money on exchange rates compared to using your own bank so if you would like a free quote then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

 

 

AUD Forecast – Australian Economic Output Continues to Heap Pressure on the AUD (Matthew Vassallo)

The AUD has been under growing pressure of late, with the Pound finding plenty of support above 1.85.

Australia’s economy remains stagnated, with concerns over global trade and uninspiring growth figures, handicapping any sustainable advances for the AUD.

This period of relative economic downturn is causing investors to shy away from the AUD, which like all commodity-based currencies is struggling to maintain its levels, due to investors risk appetite being minimal.

Yesterday’s Gross Domestic Product (GDP) figures, along with last night’s Retail Sales figures are likely to reinforce this negative undertone, although the silver lining for those clients holding AUD is that the poor figures have not yet caused the AUD to slip further against GBP.  GDP figures showed a drop to 0.2% month on month and whilst Retail Sales data showed an improvement from last month’s reading of -0.4%, they still came out under the markets expected result at 0.1%.

It is no real surprise then that the Reserve Bank of Australia continue to hold interest rates at their record lows of 1.5%. This is also causing the AUD to be less attractive to investors, who in years gone by would have looked at Australia’s previously high interest rates as an opportunity for a high yielding return on their funds.

Whilst the current climate is hardly like to inspire longer-term confidence in the Australian economy, things could be set to get wore before they get better.

One of Australia’s largest banks Westpac recently release their economic forecast for the rest of the year, in which they predicted the RBA would cut interest rates again, possibly twice by November. If this scenario comes to fruition, interest rate should fall to new record lows of 1%. This in turn will likely have negative ramifications for the AUD.

Whilst the UK continues to try and find some common ground with the EU in regards to the Irish backstop arrangement, as of yet, no breakthrough has been made. With the second “meaningful vote” fast approaching, UK Prime Minister Theresa May is running out of time to push through the amendments she will need, in order to convince parliament to vote in favour of her Brexit deal.

The markets focus will remain firmly on the UK ahead the current Brexit deadline of March 29th but any breakthrough in talks with the EU and a positive outcome to next week’s vote, is likely to drive investor confidence in the Pound and a move up to and even through 1.90 is certainly a feasible outcome.

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 nineteen years’ experience in helping our clients extract the most from 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 outlook : Will the RBA cut interest rates?

The Reserve Bank of Australia has been predicted to be cutting interest rates in the future, despite not so far making any firm inroads into the plans. Their Tuesday interest rate decision saw the Australian central bank confirm that they are taking note of the recent shifts globally but that it has not shifted their current outlook on interest rates.

The currency markets are however quite sceptical over this seem to feel that in fact the RBA will be forced to cut sooner than later. Global growth has slowed and despite some apparent respite in the Chinese to US Trade Wars, the market seems to think there is more chance of the Australian interest rate being lowered in the future. Expectations are rising that the global economy will slow in the future and and a commodity based currency, the Australian dollar will suffer.

The Australian dollar will rise and fall on the alternating prospects in the global economy, the current belief is that the general trend lower will continue. Of particular concern is the outlook for China where the market is finding concern over what lies ahead. The Chinese economy is suffering as investors face difficulty over what lies ahead and continue to predict a longer term decline of the Chinese economy.

Investors face many challenges in 2019, not least with the rising uncertainty over the negative outcomes from the Trade Wars, which will only see further uncertainty in the future on global trade. Clients with a position to buy or sell Australian dollars should it appears be gearing themselves up for a potentially weaker Australian dollar in the future.

If you have a possible transfer and wish to get an update on the latest news and information concerning the Australian dollar and what might lie ahead, then please do not hesitate to get in touch to discuss this further. We have a range of tools and options to help you to maximise your position, please email me Jonathan Watson on jmw@currencies.co.uk.

AUD Forecast – Will GBP/AUD Rates Reach 1.90 Over the Coming Days? (Matthew Vassallo)

The Pound has seen its value steadily rise against the AUD over the course of the trading week, moving back above 1.87 at the high overnight.

Whilst the AUD has found some support today around the current levels, the long-term outlook for the Australian economy remains dovish to say the least. Westpac, one of Australia’s largest banks has predicted further interest rate cuts by the Reserve Bank of Australia (RBA) this year.

With interest rates already set at record lows of 1.5%, any further decreases are likely to add to the growing sense that the Australian economy is set for a period of stagnation.

Add to this the prospect of Brexit talks finally moving yielding some kind of positive outcome, and it’s conceivable to imagine the Pound making further inroads back above 1.90.

Whilst the current outlook may seem more favourable for Sterling, the current optimism is based on Brexit talks actually yielding a positive outcome ahead of the second “meaningful” vote. This is scheduled to take place by March 12th and it will give UK MP’s the chance to vote on any amendments to UK PM Theresa May’s original Brexit withdrawal agreement with the EU.

Should the PM manage to negotiate any amendments, they would almost certainly have to include some type of concessions from the EU regarding the current Irish backstop arrangement. Many of the MP’s who voted against the PM’s initial deal in the House of Commons have stated that this is the key issue that needs to be resolved.  Therefore any softening the EU’s stance on this contentious issue, could bring it with renewed optimism that a deal can be reached by the current deadline of March 29th.

Needless to say any failure on her part to do so, will likely end the chances of a deal being agreed by the end of March and a different approach will have to be adopted. The EU would then have to grant an extension to the current deadline in order to help facilitate further talks, which will hopefully then lead to a positive outcome.

If you have an upcoming GBP or 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 nineteen 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.

Will the Australian dollar weaken further?

The Australian dollar has been weaker as poor economic data and also global concerns weigh on the currency. Investors have been closely monitoring developments with the trade wars, which have seen China and the US go head to head threatening increasing tariffs on each other. There has also been the North Korean – US Summit in Vietnam, which has not proved successful for Trump, thereby putting further pressure on the Australian dollar.

The Australian dollar is a barometer of global trade which has seen the market moving in the favour of any clients looking to buy the Australian dollar, expectations are for a very busy time ahead, as investors seek greater clarity on what lies ahead. Global trade could now be under greater pressure as investors seek to obtain more certainty around the Trade Wars and the possibility of destabilisation in the North Korean peninsula.

The Australian dollar is also suffering from pressures at home, as investors seek to obtain greater clarity over the outlook globally, and the RBA, Reserve Bank of Australia, seek to consider cutting interest rates in order to ease the wheels of their economy, in order to be able to manage any possible downturn.

The slowing economy globally, and increased uncertainty in global markets, has seen the Australian economy weaker as it depends so much on strong global demand for its natural resources which include coal and aluminium and other commodities. The Australian economy has been weakening owing to these global concerns and this is now beginning to weigh on the market, as investors seek other shores and remain unconvinced about what lies ahead.

Clients with a position to buy or sell Australian dollars should be aware of a few volatile sessions ahead, we are in business to help with the planning and execution of any transfers. GBPAUD in particular, could be in for a very volatile month as we await the latest news from the Brexit. Trading levels on GBPAUD could ever surpass 1.90 at the top end of the ranges.

Thank you for reading and please let feel free to contact me if there is anything that you wish to discuss for the future.

Jonathan Watson

jmw@currencies.co.uk

Pound Australian Dollar Forecast – Pound improves after coal tensions

The Pound has continued to make gains vs the Australian Dollar after it emerged that the Chinese have put an indefinite ban on the amount of Australian coal coming in to the country.

The amount has been capped at 12mn tonnes per year and as China accounts for 34% of Australia’s export market it is a big concern for the Australian economy and this has been reflected in the Australian Dollar which has weakened to its lowest level vs Sterling since October 2018.

Clearly this issue could become a big problem for the Australian Dollar and Australia’s Trade Minister Simon Birmingham is seeking some clarity on the situation before the issue gets worse and RBA governor Philip Lowe has said ‘if it were to the sign of a deterioration in the underlying political relationship between Australia and China then that would be more concerning.’

Yesterday morning Australian unemployment came out at 5% which was in line with expectation and typically this would have helped the Australian Dollar to strengthen vs the Pound but it did little to impact GBPAUD rates as the markets focused on the tensions between China and Australia.

During the next few days and as we come to the end of the month there is little economic data due out for Australia so the coal story is likely to dominate the next few days for the Australian Dollar.

In the meantime the UK may be holding the next vote on Brexit on 27th February and at the moment it appears that the deal is far from being approved so I expect another loss for the Prime Minister in the House of Commons.

This could give the Pound a boost as it means that Brexit may not be happening 5 weeks from today and the likelihood is that Article 50 is extended.

Although this will not solve anything it does mean that the finite period of uncertainty is removed and this could provide the Pound with a lift against the Australian Dollar.

If you would like to save money on exchange rates compared to using your own bank or another broker then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

RBA under pressure causing the Pound to make gains vs the Australian Dollar

The Reserve Bank of Australia has once again signalled that things are not looking in great shape for the Australian economy owing to higher unemployment levels combined with lower inflation if UK house prices continue to fall.

Indeed, according to some reports there has been a drop of almost 60% in investment from foreign buyers in to the property market in Australia.

Up until last year Australian house prices had been rising significantly but both Sydney and Melbourne which were leading the market in terms of house price growth have both started to feel the effects and have started to drop during the last 18 months.

With a lot of wealth for Australians tied up in their houses the fall in value is clearly a concern for the central bank as this could trigger a fall in consumer spending and then cause GDP to fall.

At the moment Australian interest rates are at their lowest levels in over 50 years and there appears to be little appetite to consider raising interest rates any time soon.

Indeed, if anything the expectation is for the Reserve Bank of Australia to look at cutting interest rates during 2019 and this is one of the main reasons for the weakness in the value of the Australian Dollar against the Pound.

In the meantime the Australian Dollar is also feeling the pressure owing to the ongoing Trade War issues between the US and China.

China is Australia’s largest trading partner so any signs of a slowdown in growth or reduced demand will often have a negative impact on the value of the Australian Dollar and this is another reason why the GBPAUD exchange rate has been trading around the 1.80 level recently.

Relations between the two superpowers appear to have stalled once again and hopes are that a deal covering Chinese goods coming in to the US will be resolved before the deadline of 1st March.

Both sides are hoping that a resolution can be found but we are less than 2 weeks to go before the proposed deadline and this could negatively impact the value of the Australian Dollar which is good news for anyone looking to buy Australian Dollars in the next fortnight.

If you would like a free quote when buying or selling Australian Dollars and would like to save money on exchange rates compared to using your own bank then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk