Category Archives: Australian Dollar Strength

Further losses for Sterling vs the Australian Dollar expected (Tom Holian)

The Pound has made some limited gains vs the Australian Dollar recently but ultimately is struggling to break much higher.

There are a number of different reasons as to why the Australian Dollar is performing so well against the Pound at the moment and I think we’ll see GBPAUD rates fall below 1.60 in the near future.

The Reserve Bank of Australia has made it clear that there will be no interest rate change for the time being and as interest rates are so high compared to any other leading economy we are continuing to see money invested in Australia.

Commodities have also been improving other the last year with the value of iron ore rising by over 50% in that same time. With iron ore such a huge part of the economy this has also kept the AUD strong against Sterling.

The Pound is also struggling against most major currencies and with next month due to see the triggering of Article 50 we could be in for further uncertainty ahead and a loss of confidence for Sterling.

Indeed, it is not yet clear whether the UK will opt for a hard or a soft Brexit and the lack of clarity is causing problems for the Pound.

The UK economy has actually been performing relatively well but recently we have seen two sets of data that should cause real concern. UK Average Earnings have started to fall and with inflation on the rise this means the UK consumer will ultimately have less money to spend and this was clearly demonstrated with the release of UK retail sales for January which saw the lowest level in three years.

On Wednesday we see the release of Chinese manufacturing data and Australia’s commodity index for February and if both come out well I think we’ll see the Pound fall against the Australian Dollar.

If you have a currency requirement coming up and would like more information or for a free quote when buying or selling Australian Dollars then do not hesitate to contact me directly and I look forward to hearing from you.

Having worked for one of the UK’s leading currency brokers since 2003 I am confident of offering you competitive rates as well as help with the timing of your transfer.

Tom Holian teh@currencies.co.uk

 

What next for GBPAUD exchange rates?

Most analysts are closely watching the GBPAUD exchange rate signs that the recent trend is likely to continue. GBPAUD has been on a slide since the beginning of the year as investors fears over the Brexit triggered sterling losses, whilst the pound has recovered since then the Aussie has too making headway against many currencies. A higher interest rate and rising commodity prices are all portraying an economy that is likely to benefit further from global conditions. If you need to buy Australian dollars with pounds taking advantage of the recent improvements is probably a good bet since the outlook looks like it may favour the Aussie over the pound.

Most investors have been carefully tracking the market looking for clues as to what might happen next for GBPAUD, having enjoyed levels above 1.70 all was not looking too bad. The recent confirmation that the RBA will not be looking at further interest rate cuts has however piled the pressure on the rate pushing GBPAUD back towards 1.60 as investors prefer to throw their funds behind the much higher yielding Aussie versus the pound. Sterling is likely to suffer as investors hesitate ahead of the Article 50 decisions next month. Most clients are looking for improvements if they have to buy Australian dollars with pounds but with the likelihood of GBPAUD slipping, I would not be getting overly excited.

Next week is an important one for the rates as we have a whole new host of economic data to be released which will more than likely lead to volatility across the board. GBPAUD seems bound to remain in a range of 1.60-1.63 with a real downside risk to rates falling below 1.60 over the course of March. We warned you last year when we were at 1.70 the rate was likely to deteriorate and I would like to gently warn clients buying AUD now that there remains a strong chance the Aussie will remain very strong against the pound.

If you have a transfer to consider please feel free to speak to me Jonathan Watson by emailing jmw@currencies.co.uk about the latest forecast and the best rates of exchange.

 

Sterling Struggling to Make Significant Impact Against the AUD (Matthew Vassallo)

GBP/AUD rates are marooned under 1.65 at present, with the Pound struggling to make any sustained impact against the AUD.

Every time Sterling takes a step forward, another headline or rumour seems to sap investor confidence and the we see it snap back.

The currency markets continue to brace themselves this week for for further developments regarding the UK’s upcoming Brexit, with members of the House of Lords discussing the bill before it heads back to the House of Commons for final approval. Although there is likely to be little resistance to the result of June’s referendum, any amendments could cause a delay in the triggering of Article 50.

With UK Prime Minister Theresa May sticking stringently to her March deadline, any delay to this timeline would likely cause further uncertainty amongst investors and the Pound could come under further pressure against the AUD and a move back under 1.60 is not out of the question.

The final decision by Parliament is likely to have a significant impact on GBP/AUD exchange rates over the coming weeks, as investors risk appetite will be dependent on how smoothly the UK can facilitate its exit from the EU and what deals, if any, are left in place with our closest trade partners the EU.

The AUD has benefited from a run of positive economic data and the uncertainty surround the UK economy at present. However, due to the fact the AUD is a commodity based currency and as such relies heavily on its export trade, in particular the export of its raw materials to China, any global slowdown in this sector will hit their economy hard and the AUD would likely lose value as a result.

If you have an upcoming GBP or AUD currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.

If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on mtv@currencies.co.uk

GBP/AUD declines further, will the pair fall below 1.60? (Joseph Wright)

Sterling is dropping in value once again against the Aussie Dollar, which in contrast to how the currency is performing against other major currencies such as the Euro or the US Dollar.

After some less than impressive US economic data releases so far this week, demand for the high yielding Aussie Dollar is on the rise as the likelihood of the US Fed Reserve Bank raising interest rates 3 times this year is likely to weaken if economic data out of the US doesn’t justify it.

Planning a currency exchange involving the Aussie Dollar can be difficult as it’s performance depends on a number of outside factors. There are fears the Aussie could weaken as the year goes on if the US is to raise interest rates a number of times this year as demand for the US Dollar will then increase, and investors would likely move deposits from the likes of the Aussie Dollar into the US Dollar.

The Australian economy is also reliant on key trading partners such as China so a slowdown in the Chinese economy could also weigh on AUD’s value but as it stands the currency is doing particularly well.

With the Brexit process to begin next month I think there’s a chance the Pound could come under additional pressure, and we may see the mid -market level between GBP/AUD fall below 1.60.

If you are planning to make a currency exchange involving the Pound and another foreign currency, it’s well worth your time getting in contact with me on jxw@currencies.co.uk in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible.

UK Retail Sales data causes Sterling to fall against the Australian Dollar (Tom Holian)

The Pound to Australian Dollar rate fell once again after another poor release of UK Retail Sales which showed their worst performance for three years.

The data has fallen for the third month in a row and with inflation rising in the UK and average earnings showing a fall recently this could be a sign of things to come for the British economy.

This now makes it less likely that the Bank of England will look at raising interest rates this year.

UK Retail Sales were expected to see a growth of 1% but instead the data came out at -0.3% and this caused the Pound to fall vs the Australian Dollar.

Bank of England governor has previously predicted a slowdown and has been criticised for his negative outlook but his judgements appear to be getting more accurate recently.

Since Brexit GBPAUD exchange rates have dropped by over 15% and with Australia now having avoided recession for over 26 years it is difficult to see any gains for Sterling coming anytime soon.

With Article 50 also dominating the political landscape the Pound is remaining under real pressure against all major currencies and I think we could see Interbank levels drop below 1.60 during the course of this month.

Next week the UK releases its first estimate of GDP figures for the fourth quarter on Wednesday so if you need to buy or sell Australian Dollars then keep a close eye on what happens to exchange rates immediately following the release.

If you have a currency transfer to make 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. Having worked in the industry since 2003 I can also with my experience help you with the timing of your currency transfer.

Tom Holian teh@currencies.co.uk

 

Will GBPAUD rates rise or fall in the coming weeks?

I would be surprised to see the pound making big further gains against the Australian dollar since the prospect of the triggering of Article 50 is looming large in the coming weeks. The passage of the bill to trigger Article 50 is making its way through parliament and the House of Lords, most expect that the bill will pass but there is plenty to be conscious of to trigger sterling weakness.

Most commentators expect that the pound will therefore struggle particularly as economic uncertainty also starts to bite. If we do not look to the slightly deteriorating economic data on Retail Sales the political uncertainty itself is likely to be a big drain on the pound in the coming months. Another factor is of course what is happening in Australia with the upcoming  economic data there. The Chinese economy appears to be going from strength to strength which combined with improvements in the prices of commodities is also leading to a much stronger Australian dollar.

Many analsysts believe that the Australian bank will no longer be seeking to cut interest rates and will instead be looking to raise interest rates at some point in the future once the Australian economy shows real signs of improvement. The overall factors that will I believe influence the rates are continued changes in the rate of Inflation in Australia. Notably the market is closely monitoring the situation for any signs that the bank will be forced to raise rates. Of course one thing the Australian bank do not want is a overly strong currency so this is something to also watch out for.

On the whole it seems the market will favour a stronger Australian dollar as investors predict their interest rate will rise at some point in the future. If you have a currency transfer to consider why not speak to me Jonathan Watson about everything that is happening to move your exchange rate? Please email me on jmw@currencies.co.uk to get a full overview of the market and your position.

Sterling Struggling to Make Sustained Impact Against AUD (Matthew Vassallo)

Whilst the Pound has gained some positive momentum against most of the major currencies recently, it’s struggled to make any sustained impact against the AUD over recent weeks.

GBP/AUD rates spike aggressively earlier this week, with the pair moving back towards 1.64. However, following better than expected employment data overnight the AUD has found support hitting a high of 1.61, before retracting to around 1.62 by close of European trading.

However, we did see it hit a high of almost 1.65 last week but struggled to make any further inroads and it seems to be marooned under 1.70 for the foreseeable future. This has become a key resistance level on the pair and based on the on-going uncertainty surrounding the UK’s Brexit, it may be that the Pound will struggle to break through this threshold anytime soon.

The AUD has benefited from a run of positive economic data and the uncertainty surround the UK economy at present. The Pound is continuing to be stabilised by Brexit talk and even if Theresa May gets her wish and Article 50 is triggered in March, how we will facilitate our exit over the coming months & years could be seen as negative by the markets, depending on the deal she is able to achieve.

However, due to the fact the AUD is a commodity based currency and as such relies heavily on its export trade, in particular the export of its raw materials to China, any global slowdown in this sector will hit the Australian economy hard and the AUD would likely lose value as a result.

Therefore I would be looking to take advantage of the current highs for AUD sellers and not gamble on what has become and extremely unpredictable and volatile market.

If you have an upcoming AUD currency transfer to make and are concerned about the current market instability, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact us on 0044 1494 725 353 and ask one of the team for Matt.

Alternatively, I can be emailed directly on mtv@currencies.co.uk and can answer any queries you have about the current market trends & forecasts.

Australian Dollar Strength after Stronger Unemployment Numbers (James Lovick)

The Australian dollar received a boost over night following an improvement in Australian unemployment. Unemployment fell by 0.1% in January from the month prior although the market reaction has been somewhat short lived. The Australian economy has remained incredibly resilient in recent months and has been further supported by stronger economic data from China earlier in the week. Chinese inflation climbed rapidly to 1% in January which was 0.7% above expectation

The Aussie is impacted not just by events in China but also the US. The Trump administration is still finding its feet having being dogged by Russian scandal and court cases over migration. It is only a matter of time before President Trump starts to introduce his major policies which are believed to include a huge infrastructure project domestically whilst foreign policy will also be one area to watch.

The path of US interest rates will also be a major factor for Australian dollar exchange rates. After Janet Yellen’s speech to congress this week it is widely expected that there will be an interest rate increase in March from 0.75 to 1%. This is important as there is likely to be a flow of funds back to the US dollar away from the commodity currencies to include the Australian dollar. As such there is a good chance the dollar could weaken from its recent highs.

Meanwhile for GBP AUD Brexit fast approached with a date for invoking Article 50 expected in March. Those clients looking to buy or sell Australian dollars would be wise to get in contact at the earliest opportunity in advance of the approaching political events. There is likely to be considerable volatility in these coming weeks which is likely to present some excellent opportunities for buyers and sellers alike.

If you would like further information on Australian dollar exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk

Is the Australian Dollar overvalued? (Daniel Johnson)

Australian Dollar strengthens following positive Chinese inflation data

The Australian economy is currently performing well, and last night the Australian Dollar was given a further boost by positive inflation data out of China. Inflation rose significantly from 0.2% in December to 1% in January. Australia is heavy reliant on China buying it’s exports and positive data from China will cause Australian Dollar strength. Australian business confidence is currently at new highs according to the recent National Bank of Australia’s Business Survey so the outlook is positive. Keep an eye on unemployment data through the early hours as if there is any significant deviation from expectations we could see volatility on GBP/AUD.

Brexit  Bill

The House of Commons have now passed the exit bill and it is now to be handed to the House of Lords. Personally I feel the bill will now be passed without too much resistance. However there are three key topics to be debated over 48hrs commencing on 20th February. The following amendments are a possibility.

  • A guarantee that three million EU citizens residing in the UK will have their rights protected post-Brexit.
  • Parliament must be updated frequently on trade negotiations. A minimum of once every three months.
  • A guarantee that Parliament will be given the chance to vote on Theresa May’s final exit deal.

Any amendments have the potential to push back the triggering of Article 50. Any delay will result in Sterling weakness.

Keep an eye on UK Inflation

UK inflation is being watched closely at present as many analysts are predicting sharp rises in 2017. With the pound so weak in value, imports are now proving more expensive.  Inflation data came in weaker than expected yesterday which is surprising and slightly worrying. I seems that the increase in prices is yet to filter through to the consumer. Let us hope that when it does, it is not a huge, sharp rise, as wages will not be able to increase at the same rapid rate and the UK economy will suffer.

Trade Negotiations – The key Market mover on GBP/AUD – Where is GBP/AUD headed?

Despite the positive data coming out of Australia. I still feel the Pound is chronically undervalued. GBP/AUD is only at current levels due to the uncertainty surrounding trade negotiations following Brexit. Once Article 50 is triggered and there is more certainty with regards to trade negotiations I expect Sterling to rally. I would expect it to be slow and steady, but I am confident in Sterling strength.

It is important to remember where GBP/AUD sat in September 2015, 2.20, we are now at 1.62. The UK’s economic backbone is a strong one and I feel the Pound will gain on the Aussie after Article 50 has been invoked.

If you are buying Australian Dollars short term, you are in a difficult position. I would strongly consider getting in touch with an experienced broker to assist in maximising your trade return. If you would like my help please do get in touch by contacting me at dcj@currencies.co.uk.

If you have a currency provider in place, let me know the details of your trade and I will happily provide a comparison. I am confident I will provide a substantial saving. Thank you for reading and I look forward to hearing from you.

Daniel Johnson – Foreign Currency Direct

Senior Trader

Australian Dollar exchange rates hinge on unemployment figures due out on Thursday – Will we see Australian Dollar strength? (Daniel Wright)

Australian unemployment figures are due to come out on Thursday and expectations are that we may see the continuing trend of a fairly robust economy with the unemployment figure predicted to be at 5.8%.

Should this come out as expected or even slightly better then we may see the Australian Dollar make some further gains against most majors but any rise in unemployment may knock Australian Dollar exchange rates back a little.

The Australian economy has had a few knocks over the past few years but still seems to be hanging on in there, and earlier predictions of large Chinese problems appear to have been swept under the carpet for the time being.

I am still of the opinion that the Australian Dollar will have a period where it does have a tough time, however the issue is that as it stands it is seen as one of the best of a bad bunch, with interest rates still fairly favourable we may not see that change too imminently.

One larger factor that may be a trigger for a drop off could be further rate hikes in the U.S, should we see the interest rate in the States start to catch up the interest rate in Australia then you may see a large unwinding of carry trades, as investors would rather have their funds sat in USD than AUD due to its perceived safer nature.

Carry trading is where an investor borrows money in a low interest rate and shifts it to a currency with a higher interest rate, making a return on the difference.

If you are looking to buy or sell Australian Dollars against any major currency in the near future and you want to maximise your rate of exchange then it is well worth you getting in contact with us here personally. You can email me (Daniel Wright) on djw@currencies.co.uk with a brief description of what you are looking to do and I will be more than happy to contact you personally.