Category Archives: Australian Dollar Weakness

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.

Pound remains strong against the Australian Dollar even after poor UK GDP figures

The Australian Dollar has continued to struggle against the Pound hitting 1.82 during today’s trading session creating some good opportunities for anyone looking to convert Pounds to Euros at the moment.

The Reserve Bank of Australia was relatively dovish during its recent press conference and accompanying statement and it appears as though the next rate change for the central bank down under could be a rate cut in the future.

One of the reasons why the RBA has yet to make a change to interest rates is owing to the recent higher than expected inflation data, which although lower than the 2-3% target has been rising recently.

Typically if inflation rises then the usual strategy to combat this would be to increase interest rates but as the property market in Australia is showing real signs of slowing down then an interest rate rise down under could cause big problems for the Australian housing market and could send home owners in to negative equity.

According to many sources an interest rate cut before the end of 2019 now seems like a certainty and this is part of the reason why the Pound continues to remain relatively strong against the Australian Dollar.

Whilst the Trade Wars between the US and China continue to rumble on then global investment appears to be bypassing the Australian Dollar in favour of the US Dollar and this is another reason for the continued weakness of the AUD vs the Pound.

Earlier on today UK GDP showed a slowdown for the final quarter of 2018 combined with some lower than expected Industrial and Manufacturing Production data but this did little to negatively impact Sterling as the market appears to be waiting to see how the Brexit talks will progress during the course of this week.

I have worked for one of the UK’s leading currency brokers since 2003 and I’m confident that not only can I help you save money on exchange rates compared to using your own bank but also help you with the timing of your currency transfer. For a free quote then contact me directly via email with a brief description of your currency requirement and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

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.

 

 

 

Australian Dollar weakens after RBA comments and how will the Irish backstop issue impact the Pound and the Australian Dollar

The Pound has been improving once again against the Australian Dollar and has moved by almost 4 cents during the course of this week.

The Australian Dollar weakened against the Pound after RBA Governor Philip Lowe’s comments that there was a chance that the Reserve Bank of Australia may be preparing for an interest rate cut later on during 2019.

Tomorrow morning the RBA will announce their latest Monetary Policy Statement, which will cover the issues and the reasons why the members voted as they did at the recent meeting.

The reason why this Statement could be key to the short term future of the GBPAUD exchange rate is because it will give us an insight as to what the appetite is of a future interest rate cut.

With the US Federal Reserve having increased interest rates by 9 times since the end of 2015 although they do not appear to be increasing interest rates at the same pace during this year, the risk for the Australian Dollar is that it does not offer the same yield of interest that is available in the impressive US economy at the moment.

If the RBA do decide to cut interest rates later this year then the likelihood is that this will cause the Australian Dollar to weaken in the future but there are many variable in between including the latest Brexit issues.

UK Prime Minister Theresa May is currently in discussions with European leaders to try and sort out the issue of the Irish backstop as the UK and the EU are currently at loggerheads as to how this scene will play out.

The Bank of England are also due to meet today to decide their latest monetary policy decision. Clearly at the moment there is little chance of any change to interest rates whilst we are just 7 weeks from when the UK is due to leave the European Union so it will be the accompanying press conference that will provide any clues as to what will happen to the Pound vs the Australian Dollar. Bank of England Governor has been rather cautious in his tone towards Brexit so any more of the same could see a small wobble for Sterling later on today.

If you would like a free quote when buying or selling Australian Dollars then contact me directly and I look forward to hearing from you.

Tom Holian teh@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.

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

Best rate to buy Australian Dollars with Pounds since October 2018 (Tom Holian)

The Pound is now trading at its best rate to buy Australian Dollars since October with the Interbank level touching above 1.85 for a brief period of time earlier on this morning.

During this week we have seen GBPAUD exchange rates improve by as much as 5 cents or the difference of £1,600 on a currency transfer of AUD$100,000 highlighting the importance of keeping up to date with what is happening on the foreign exchange markets at the moment.

Chinese economic data has shown a slowdown with GDP coming out at 6.4%, which although very impressive this is highlighting a slow down in the world’s second largest economy.

Chinese GDP hit its lowest level in ten years earlier this week and whilst the Trade Wars with the US continue to affect China this is also another reason why the AUD is struggling

As Australia is heavily reliant on what happens with the Chinese economy this is in part a reason for the weakness in the value of the Australian Dollar.

Another reason for the weakness of the Australian Dollar comes down to the level of interest available for the investor. Last year the US Federal Reserve hiked interest rates to 2.25% and with the Australian interest rate sitting at 1.5% investors are bypassing the Australian Dollar in favour of the US Dollar for more attractive rates of return on their investment.

As we turn the focus back towards the UK it appears as though the Brexit may continue to run and run with lots of speculation that the UK will extend Article 50 rather than leave the European Union on 29th March.

Since the start of December when the previous vote was postponed the most recent vote from early last week confirmed that a majority of 230 MPs voted against the current Brexit deal on offer.

At the moment the likelihood of MPs voting through the next plan appear very unlikely and this suggests that Article 50 will have to be extended unless the UK crashes out of the European Union with a no deal Brexit and this is why the Pound has made gains vs the Australian Dollar.

Having worked in the foreign exchange industry since 2003 I am confident of being able to offer you better exchange rates than using your own bank so if you would like a free quote when buying or selling Australian Dollars then contact me directly for a free quote and I look forward to hearing form you.

Tom Holian teh@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

The reasons why the Pound could break 1.80 this month against the Australian Dollar

The Pound has briefly touched 1.80 against the Australian Dollar this week but has yet to make a sustained break past this particular level of resistance. However, I’m confident that the Pound will keep knocking on the door of 1.80 before eventually breaking through before the end of this month.

The political uncertainty in the UK has actually done the reverse of what many expected to happen in terms of the value of Sterling.

Clearly the Brexit deal on offer is not something that MPs have much confidence in, which saw a majority vote of 230 against the deal. Since then, the Prime Minister Theresa May has managed to once again survive a vote of no confidence with the Tories and the DUP voting in favour of supporting the Prime Minister.

The reason why the Pound has found support against a whole host of currencies including vs the Australian Dollar is because it looks more and more likely that the withdrawal from the European Union with a no deal Brexit will not happen.

Theresa May has yet to confirm officially if the UK will rule it out and I think that she is doing so to keep her negotiating power as strong as possible when she next meets with the European Union.

It appears also that the UK will attempt to extend Article 50 as it is clear that neither the UK nor the European Union is ready for the end of March.

Even though the uncertainty as to what may happen next with the Brexit talks still exists the good news for the Pound is that the finite period before the end of March may not now happen and this either moves the UK towards a softer Brexit or perhaps even no Brexit if MPs do not manage to agree on the terms of any future deal.

The market will ultimately want trade not to be adversely affected and therefore this is why I think we will see the Pound break through 1.80 during January.

I have personally worked in the foreign exchange industry since 2003 for one of the UK’s leading currency brokers and I’m able to offer you bank beating exchange rates so if you would like to save money then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk