Category Archives: Australian Dollar Weakness

Reserve Bank of Australia update: Interest rate cuts expected

The pound to Australian dollar exchange rate has rallied higher today with rates for the GPB vs AUD sitting above 1.8250. There is a growing expectation that the Reserve Bank of Australia (RBA) may look to cut interest rates further at the meeting tomorrow morning. Some of the major banks including Westpac are predicting an interest rate cut which could be putting further pressure on the Australian dollar. Westpac has predicted rates for AUD/USD could hit a 10 year low as a result of further interest rate cuts. The RBA cut rates consecutively in June and July to try and add some stimulus to the economy to try and halt a slowdown down under. Unemployment in Australia recent climbed higher to 5.3% up from 4.9% the month prior which is causing alarm amongst policy makers at the central bank.

In the UK, Brexit remains the single biggest driver for sterling exchange rates. Expect a highly volatile week with the Conservative party conference in full swing despite a number of cyber-attacks making communications out of the conference difficult. Today is the second day of the conference and a speech from Chancellor Sajid Javid will be made this afternoon. Prime Minister Boris Johnson will be making his speech on Wednesday.

However with parliament now sitting after the Supreme Court ruled the proroguing of parliament to be unlawful the outlook as to whether there will be a deal or not is looking very cloudy and leaves an unclear picture for GBP to AUD exchange rates. Much of the Brexit debate focuses on a bill that was approved in parliament that requires the Prime Minister to request an extension for Brexit, something Boris Johnson strongly opposes. There have been reports that parliament will seek to introduce further legislation against the government to try and stop Boris Johnson from not committing to do this and he refuses to rule out a no deal Brexit.

It is worth mentioning that Nigel Farage announced over the weekend that he would stand for a seat in Westminster at the next general election which only highlights how tense the Brexit situation currently is.

Those with pending requirements to either buy or sell Australian dollars would be wise to consider their options with just one month to go before the Brexit deadline of 31st October. For more information on the Australian dollar and assistance in making transfers when either buying or selling Australian dollars please contact me James at jll@currencies.co.uk

Pound to Australian Dollar Outlook after Supreme Court Rules against British Government

Parliament set to return today

The pound to Australian dollar exchange rate remains supported with rates having touched 1.84 for the GBP vs AUD earlier today. Yesterday saw the Supreme Court in Britain rule against the government finding that it was unlawful to prorogue parliament for 5 weeks. Today will now see parliament return at 11:30 and more uncertainty will inevitably come out of this. There have been calls from opposition party leaders for the Prime Minister to resign.

It has been reported that the government may use the opportunity of asking an ‘urgent question’ to try and force a debate on having a general election. The opposition parties that wish to see Boris Johnson depart from office are unwilling to call a vote of confidence which would trigger a general election which leaves a continuing deadlock in parliament. Jeremy Corbyn the leader of the Labour party is not expected to call for a vote of confidence in the Prime Minister today. Expect high volatility for GBP to AUD exchange rates as the Brexit deadline of 31st October approaches. Those with pending requirements to either buy or sell Australian dollars would be wise to plan around all the latest developments coming out of Westminster.

Will the RBNZ cut interest rates in November?

The Reserve Bank of Australia have said that the Australian economy is at a “gentle turning point”. The RBA cut interest rates twice this year with two consecutive rate cuts in June and July putting the pressure on Australian dollar exchange rates. The speech from Governor Philip Lowe was perceived as more dovish than expected. Keeping all option open he said that the RBA would “take stock of the evidence” on whether to cut again or not but the tone was seen as softer than the previous rhetoric. The Reserve Bank of New Zealand is also expected to hold rates having shocked the markets wit ha 50 basis point rate cut this year. It is relevant for the Australian dollar as the RBA was quick to act after the RBNZ made its policy decision to cut rates. The RBNZ are tipped to cut rates again in November and there is an argument to say it may have some sway on the RBA’s decision making.

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

Is QE on the cards from the Reserve Bank of Australia? (Daniel Johnson)

Pound to Australian Dollar Forecast

The Australian economy has suffered of late with a drop in house prices, increased unemployment and a cut in interest rates to a record low of 1%. Australia is heavily reliant on China purchasing its goods and due to this the US/China trade war is having an impact on the Australian Dollar.

China is in the midst of its slowest economic expansion in thirty years and the Chinese Yuan continues to drop in value posting a fresh 11 year low on Monday. Dr Adam Triggs of the Australian National University’s Asian Bureau of Economic Research points to the Trade War as a huge contributor to the Australian economy’s recent stalling “We trade a lot more than most countries and we rely on foreign money for investment, so when you start to get international turbulence we feel that a lot more than others.”

The  concerns around the Chinese economy and its drop in demand for Australian goods and services has meant that the Pound has managed to regain a footing above 1.80 on interbank despite the Brexit chaos Boris Johnson has been inflicting since taking over as Prime Minister.

As Australians interest rates follow the global trend of cuts there has been much speculation over the Reserve Bank of Australia’s, (RBA) next step in efforts to stimulate economy. For some time Westpac has led calls for the Reserve Bank to consider a further cut to 0.5% while Deutsche Bank says it expects the cash rate to drop to just 0.25% by as early as the end of this year. However, Philip Lowe the governor of the RBA has ignited a debate over whether Quantitative Easing (QE) would be the next step for the RBA. QE is essentially pumping money into an economy in order to stimulate growth. It is a controversial monetary policy as historically results have been mixed, it is far from a proven method and can also put the country in question in huge levels of debt. In the face of an economic crisis when he commented “we are prepared to do unconventional things if the economy warranted it” when questioned in Parliament.

During unpredictable times you may wish to be in contact with a currency specialist who can provide the latest currency updates. Foreign Currency Direct PLC has specialised in foreign exchange for over 19yrs and we are authorised as an e-money institution by the FCA. If you already use a provider, I can perform a comparison within minutes, to give you an indication of the potential saving you could make by using Foreign Currency Direct. If you would like my assistance I can be contacted at dcj@currencies.co.uk.

 

Could we see Monetary Stimulus from the RBA? (Daniel Johnson)

Pound to Australian Dollar Forecast

This year the Reserve Bank of Australia (RBA) has continued to cut interest rates leaving the base rate at a record low of 1%. The change in monetary policy has so far failed to stimulate growth in the Australian economy which has resulted in the RBA board looking at  alternative methods of stimulus to try and aid the struggling economy.

There is the potential that quantitative easing (QE). QE is essentially pumping money into an economy in order to stimulate growth, printing money causing huge levels of debt.  The minutes of the RBA’s July meeting revealed that these unconventional monetary policy measures were discussed.

Both the Pound and the Australian Dollar are under pressure at the moment, although for different reasons as the Australian Dollars are mostly due to economic uncertainty as opposed to the UK’s ongoing political issues.

Over the past year the GBP/AUD rate is almost flat although in recent months the Aussie Dollar has mostly benefited from Sterling weakness which has kept GBPAUD below 1.80 for almost 2-months now.

The time scale for a deal on Brexit does not make good reading. Parliament is not due to reconvene from recess until early September which will leave just under eight weeks for Boris Johnson to get a deal in place. This is something Theresa May couldn’t do in over two and a half years.

Boris has threatened to leave the EU with no deal in place and has said he is not willing to negotiate with Brussels unless they’re willing to drop the Irish back stop. This is something Brussels have stated on numerous occasions they are not willing to do. The situation has not been taken well by investors and sterling has fallen in value as a result.

There is also the possibility of a general election and it will be interesting to see how the market will react. If we look at the 2010 general election for example, we saw sterling lose value due to the political uncertainty, but if Corbyn were to call for an election the probability of a no deal decreases which could cause a rally for the Pound.

The higher probability of a no deal the weaker you  could expect the pound to become.

Despite the problems surrounding the Australian economy unfortunately it seems that the problems surrounding Brexit outweigh those down under. Until there is some sort of clarity surrounding the Brexit debacle, there could be little reason to justify significant gains for the pound.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you. If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with company FCA registered and one that has been trading for 19yrs. Foreign Currency Direct PLC.

If you would like my assistance I can be contacted at dcj@currencies.co.uk. Thank you for reading. Daniel Johnson

 

US/China Trade War hurting AUD (Daniel Johnson)

Australian Dollar Forecast

AUD  has proved fragile of late due to several contributing factors. There are domestic issues, such as the high value of living in high wage growth areas. This is causing Australian residents to cut back on retail spending. One of the key issues at present is the knock on effect from the US/China trade war.

Australia has a heavy reliance on China purchasing its’s goods and any effect on Chinese growth can have ramifications on the Australian economy. As the trade war escalates so does the potential for the Australian dollar to weaken. President Trump has recently implemented a further 10% tariff on $300bln worth of Chinese products. The Chinese have retaliated by urging  Chinese businesses  to cease purchasing US agricultural products.

Goldman Sachs believe the trade war could continue for some time which does not bode well for the global economy let alone for Australia who has close economic ties with China.

There is the possibility of further interest rate cuts from the Reserve Bank of Australia (RBA) in 2019 according to the bank Governor, Philip Lowe. This could cause movement for the Australian dollar.

Despite the problems surrounding the Australian economy unfortunately it seems that the problems surrounding Brexit outweigh those down under. Until there is some sort of clarity surrounding the Brexit debacle, I can find  little reason to justify significant gains for the pound.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you. If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with company FCA registered and one that has been trading for 19yrs. Foreign Currency Direct PLC.

If you would like my assistance I can be contacted at dcj@currencies.co.uk. Thank you for reading. Daniel Johnson

Australian Dollar under pressure against the Pound owing to Chinese data

The Australian Dollar has experienced a problem in recent times vs the Pound owing to a number of different factors.

The Australian economy is currently under pressure domestically caused by the cost of living in high wage growth areas.

This is causing Australian citizens to limit their spending but I think the main issue is that of the uncertainty caused by what is happening with the ongoing US China Trade wars.

Australia is heavily reliant on what happens in the world’s second leading economy so any negative effects on Chinese growth can cause problems for the Australian economy.

US President Donald Trump has recently imposed another tariff, this time totaling 10% on US$300bn worth of Chinese goods. This has caused the Chinese to retaliate by attempting to stop Chinese companies from buying agricultural products in the US.

In the meantime Goldman Sachs have suggested that the trade war could continue to rumble on which does not bode well for the Australian economy and therefore this could continue to negatively impact the Australian Dollar vs the Pound.

The Reserve Bank of Australia has cut interest rates a couple of times already this year and I think we could see more rate cuts coming in the future especially if economic data continues to see a slow down in Australia.

On Thursday, Australia will release it latest unemployment figures. Expectations are for a figure of 5.2% in July so anything different could cause movement for GBPAUD exchange rates. Therefore, if you’re planning a currency transfer involving Australian Dollars in the near future make sure you pay close attention to the data.

If you would like to save 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

Pound to Australian Dollar Forecast (Daniel Johnson)

Inflation & US/China trade war a concern for Australian Dollar Investors

The Pound has lost ground against the Australian Dollar of late which can be largely attributed to the lack of clarity surrounding Brexit.  Australia has had it’s own trouble however.  Inflation continues to be a problem down under and it is still some way behind the Reserve Bank of Australia’s  (RBA) 2-3% target. The RBA cut rates earlier in the year to 1% in an attempt to combat inflation and there is the possibility of further rate cuts during 2019. The next interest rate decision is due during the early hours of tomorrow and although rates are expected to remain unchanged the statement following the decision from the RBA could influence markets if it is again reiterated there is the possibility of further cuts later down the road.

The heavy reliance on China purchasing Australia’s exports is also causing problems for the Australian Dollar. As the US impose increased tariffs on China, China’s growth slows which in turn has a knock on effect to the Australian economy. Investors are choosing to move away from riskier commodity based currencies in favour of save haven currencies such as the Swiss Franc or US Dollar.

Increasing probability of a Brexit No Deal

Despite the problems in Australia, Sterling still could face further losses. Boris continues to threaten no deal and stated last week he would be ‘turbocharging’ preparations to leave the EU without a deal. Boris is using the threat of a no deal as ammunition to gain a more favourable deal on Brexit. Basically speaking however, the higher the probability of a no deal the weaker you would expect the Pound to become. Brussels stance remains unchanged again reiterating there will be no concessions to the current deal on the table. It is not in Brussels interest to let the UK leave with a decent deal, they do not want other members of the bloc to consider following suit.

The timeline is also a concern. The parliamentary recess concludes 3rd September leaving less than 8 weeks to get a deal in place, keep in mind Theresa May had two and a half years. According to Bet Fair there is a 57% chance of a general election, if you look at when previous elections have taken place the currency in question tends to considerably weaken.  The British 2010 general election serves as testament to this.

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 authorised 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 . (Daniel Johnson) Thank you for reading

Australian dollar forecast – Will the Aussie weaken?

The Australian dollar has been stronger in recent weeks as investors back the currency, following a series of events which were originally predicted to weaken the currency. Firstly, we saw the trade wars of the last 2 years escalating to the point the Australian central bank were keen to cut interest rates. This saw pound to Australian dollar exchange rates rise to almost 1.88 on the interbank rate. We are currently 1.77, and part of the reason for this is a much stronger Australian currency.

The pound has also weakened following the continued uncertainty relating to the Brexit, which so far has seen the pound losing value as no-deal Brexit becomes more likely, as both Conservative leadership candidates look to keep a no-deal Brexit as an option. It has been said Boris is perhaps more keen on no-deal, with the possibility of him as leader opening a greater prospect of this market viewed, potentially pound sinking option.

This week will see increased news also on Australian interest rate prospects, with the latest Speech by RBA (Reserve Bank Australia) Assistant Governor Kent potentially offering up some news. The market is eagerly awaiting to see if the RBA will be looking to cut levels again in the future, the market has been getting mioxed signals with Chinese growth coming in at 27-year low, but still continuing world beating growth and creating demand for Australian exports.

GBPAUD levels could be influenced by the latest news on the Brexit from the new UK Prime Minister, who will be announced tomorrow morning, before being sworn in on Wednesday evening with a speech planned for around 5pm. Any clients with an interest in GBPAUD exchange rates have plenty of news to be conscious of for this week ahead, please do contact our team to learn more.

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

Pound to Australian Dollar Forecast – GBP AUD rises over 1.80 after Weak Consumer Confidence

The pound to Australian dollar exchange rate has pushed slightly higher breaking over 1.80 again for the GBP to AUD pair. The National Australia Bank’s business survey yesterday disappointed the markets and has placed some pressure on the Australian dollar. However the Westpac consumer confidence numbers for July released overnight took a major fall into negative territory at -4.1%. The particularly low numbers signal a bumpy ride ahead with consumer confidence running low.

The weak numbers follow two consecutive interest rate cuts from the Reserve Bank of Australia although these cuts may take some time before any improvement in the economy is seen. The AUD to GBP pairing is likely to now be heavily influenced by any developments with the ongoing US China trade war and also the outcome from the next US Federal Reserve meeting later this month. The US Fed are widely tipped to cut interest rates at the July meeting and there are some expectations that there could even be a 50 basis point rate cut.

The Australian dollar as commodity currency will likely be impacted by any such move although the markets would appear to have started adjusting and pricing in prior to the event. In Australia, rates now sit at just 1%, the lowest on record and substantially lower than the average base rate which has been 4.39% since 1990. With rates so low the Australian dollar is currently disregarded as a high yielding currency and so there could be further weakness for the Aussie.

Brexit meanwhile continues to be the single biggest driver for sterling exchange rates and the GBP vs AUD pair. As the two Conservative runners battle it out for the top job the pound is likely to see a very volatile few months ahead. The new Prime Minister is expected to be announced 23rd July and the course of action he takes on Brexit will likely dictate the direction of travel for the pound vs Australian dollar. Any further rhetoric of a no deal Brexit is only likely to help see the pound weaken further. The fact that the favourite Boris Johnson has made so clear that Britain must leave the EU by 31st October with or without a deal is likely to be the main talking point for these coming months ahead of the deadline.

Tor assistance in making transfers either buying or selling Australian dollars and to talk through how these events will impact your own requirement then please get in touch with me James at jll@currencies.co.uk

Further rate cuts from the RBA could push AUD exchange rates lower, even against the struggling Pound!

The Australian economy is continuing to show signs of struggling despite the Reserve Bank of Australia’s efforts to mitigate the slowdown, after the RBA cut rates down to the lowest level in it’s history at the beginning of last month. As it stands the base rate of interest sits at 1.25% and there are some market commentators that now believe that the rate could be cut again at least once this year, which some outlining the next cut coming as soon as next month on the 18th of July, which will be the central banks next opportunity to make the decision.

Westpac Bank, which is one of the biggest lenders down under believes that there could be two cuts this year, which demonstrates the perceived weakness in the outlook for the Aussie economy moving forward. Inflation levels are stagnant in Australia and the unemployment level has also been picking up. Property prices have dropped quite dramatically throughout the major cities also and there are no concerns surrounding the construction sector so we could continue to see a sell off in the AUD’s value if these predictions materialise.

The main driver of the Pound will continue to be the Conservative leadership contest which will determine the UK’s next Prime Minister, and also the route for Brexit. Boris Johnson remains the frontrunner, and his outlook differs from that of Jeremy Hunt’s so we could see volatility for the Pound regarding this matter.

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.