Tag Archives: australian economy

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 .

 

 

 

 

 

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.

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 – 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/AUD Rates Retract as Fears of No-Deal Brexit Gather Pace Once Again (Matthew Vassallo)

GBP/AUD rates have dropped by over a cent overnight, with the Pound losing support following parliaments decision to vote in favour of the Brady amendment.

Sterling hit a low of 1.8155, with investors selling off their GBP positions amid fears of what last night’s House of Commons vote could mean for Brexit.

MP’s voted in favour of an amendment to Prime Minster Theresa May’s Brexit deal by 317 votes to 301. This means that they will ultimately back a deal if the PM can negotiate changes to the much maligned Irish backstop. She has pledged to return to parliament with a deal to be voted on by February 13th, as long as the EU are willing to make the necessary concessions.

This however, is the key point and possibly why the Pound saw its value slip against the AUD since the vote was passed. The EU have made it abundantly clear that they are not prepared to renegotiate the terms of the Brexit deal, in particular removing the agreed Irish backstop.

Whether this is ultimately true, or they are playing hardball in terms of their negotiation tactics is now the question investors will be asking themselves.

Based on last night drop in value for the Pound, they are obviously not overly confident in an agreement being reached and if this ends up being the case, then a no-deal scenario once again becomes the most likely outcome.

This is seemingly what the markets fear most and are seemingly preparing themselves for this eventuality.

Looking at the AUD and it likely last night’s rise in value had far more to do with a dip in confidence for the Pound, rather than a spike in value for the AUD. The Australian economy continues to feel the pinch from a slowdown in Chinese economic growth and thus a fall in demand for Australia’s raw materials. Being Australia’s largest trade partner, any slowdown in China will inevitably have a negative knock on effect for the Australian economy and ultimately the AUD.

Add to this concerns over a slowdown in global trade, something the AUD and all commodity-based currencies fear and it is likely that the short-term trend on GBP/AUD rates will be dictated by investors’ confidence or lack of it, in the on-going Brexit negotiations.

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 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.

 

Will next week’s vote on May’s Brexit deal cause movement for GBP/AUD?

The Pound has been trading within relatively thin volumes this week against most major currency pairs as the currency comes under pressure in the lead up to next week. On the 15th of this month, which is next Tuesday there will be a ‘meaningful vote’ on Prime Minister, Theresa May’s Brexit plan and much of the speculation this week revolves around that date.

The Australian Dollar, despite being the biggest loser in terms of currency throughout 2018 of the G10 countries, has actually been increasing in value over the past week as hopes of a agreement between the US and China over the trade war talks increase. There have been ongoing discussions recently between the two leading economies, and this is a positive for Australia as China is the country’s main trading partner.

So far this morning the Pound has got off to a poor start, as pressure builds in the lead up to next week’s vote, especially after the first planned vote was delayed as May was concerned of a major loss. The latest Brexit related update is that yesterday evening Parliament voted in a new amendment specifying that the government has 3-days to report back to the commons with its ‘plan B’ in the event that May loses next week.

Economic data is taking a back seat at the moment owing to the importance of UK politics at the moment, but it’s worth being aware that on Friday there will be UK GDP figures released at 9.30am with growth of 0.1% expected. I would expect to see a drop in the Pounds value if this figure disappointing especially if the figure shows a negative figure.

If you wish to be updated and to plan around what could be a busy week for the GBP/AUD pair, do feel free to register your interest with us.

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.

 

Brexit chaos continues as Conservative MP’s trigger a vote of no confidence in PM May, will this put pressure on GBP/AUD?

This morning it’s been announced that a vote of no-confidence has been triggered by the Conservative Party after Sir Graham Brady, the Chairman of the 1922 Committee confirmed that he has received at least 48 letters of no-confidence from Conservative MP’s.

The Chairman of the 1922 Committee isn’t required to announce how many letters he’s received but we do know that it’s at least 48 as this number constitutes 15% of the Tory members. Since the news broke the Pound has actually remained unchanged and this is probably because the vote will take place this evening between 6.00 pm and 8.00 pm so until shortly afterwards we won’t know the outcome and therefore, the next steps for Brexit.

Since the announcement which was around 7.45 am this morning, there have been a number of Conservative MP’s that have outlined their plans to support May, with the general consensus that a change in leadership this far into the Brexit process would be chaotic. If there are a number of votes against against her though, there is a chance she may resign even if she’s not obliged to owing to the lack of support from her own political party.

May has already given a speech outside Downing Street this morning whereby she’s highlighted that if she’s replaced a new leader would have to delay Brexit, as they wouldn’t have enough time to renegotiate the withdrawal agreement.

With regards to the Pound to Aussie Dollar exchange rate I would expect to see the next potential market movement to come after the vote this evening, with the result expected to be released shortly after the vote.

AUD exchange rates have been influenced over the past week and a half by the concerns that the US-China trade war tensions could resurface, as China is Australia’s main trading partner. Those of our readers planning a GBP/AUD trade should follow this matter as it’s the main driver of AUD value at the moment.

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.

Retail Sales down under disappoint but AUD remains resilient, where to next for the GBP/AUD pair?

Despite some disappointing data being released in the early hours of this morning, the Aussie Dollar has remained resilient against the Pound even though its dropped off of it’s 1-month high against the US Dollar.

Retail Sales rose just 0.2% through September which was below expectations, and now there are concerns that 3rd quarter economic growth could disappoint. The GDP figure for the 3rd quarter will be released in early December so I expect economic data releases covering the Australian economies health to be followed closely. Despite the softening against the US Dollar as a result of this morning’s early release the AUD/USD rate has still strengthened by over 1.5% throughout this week.

The Aussie Dollar has also gained value vs the Pound this week although not quite to the same extent as AUD/USD. Moving forward the pair are most likely to be driven more by the Pound’s value and how its impacted by the Brexit developments. Sterling has strengthened against a raft of currencies over the past few days after a number of positive updates have been released. On Wednesday the Brexit Secretary, Dominic Raab suggested that the deal could be in place by November the 21st, which saw a spike in GBP exchange rates as hopes of the deal being wrapped up during this month had waned after talks stalled during October.

Then on Thursday morning news broke that there is a deal in principle for the UK to retain access to EU financial markets after the Brexit has taken place, and this also pushed GBP exchange rates higher which is in my opinion why the Aussie Dollars gains against the Pound this week haven’t been as substantial as the they have vs the USD.

If you’re planning on making a currency transfer involving the pairs discussed today, and would like an opinion on the rates or an update if they move dramatically, do feel free to register your interest with me.

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.

Important events on the Australian dollar this week

The Australian dollar exchange rate has been volatile in the last few weeks owing to the uncertainty over the future direction we will see on a number of factors. These include the Trade Wars with China and also the outcome from the latest economic data in Australia. Investors are expecting us to see the Australian currency closely reacting to developments on these issues, the immediate outlook is not clear.

China’s economic performance is a key indicator of the Australian dollar as investors track its progress with a view to better understanding where events will turn next. One of the key factors in all of this will be the next steps that the Trade Wars take with investors feeling any negative news would see the Australian dollar weaker.

Overnight are two speeches by RBA, Reserve Bank of Australia, members which will carry some weight in the market. The actions and comments by the central bank are very important in providing some direction on which way the currency will perform in the week ahead. Most notably ahead is the speeches by Assistant Governor Bullock and also Debelle, either of which could prove most interesting for the Aussie.

Last week, there was some more positive Unemployment data released which will have had a more swaying impact on future economic policy from the RBA. Other news I would foresee as being instrumental in shaping the likelihood of market fluctuations will be the ECB interest rate decision. The European Central Bank will provide some insight into their own future monetary policy as well which will influence global risk sentiment.

In targeting a higher interest rate over the longer term, the Australian dollar exchange rate could lose value if investors look to try and shift towards the potentially higher yielding Euro.

If you have a currency transfer involving the Australian dollar and wish to learn of some of the latest market news, please do not hesitate to contact me Jonathan Watson directly.

Jonathan Watson

jmw@currencies.co.uk

AUD Forecast – What are the Factors Driving GBP/AUD Exchange Rates? (Matthew Vassallo)

GBP/AUD rates have dipped slightly during Thursday’s trading, with the AUD continuing to find support around the current levels.

The pair fell to a low of 1.8338, having been trading above 1.84 at its high over night.

The Pound has failed to make any sustained inroads against the AUD since the weekend, after premature talk of a Brexit agreement caused a sharp sell-off of GBP positions on Sunday.

This put the Pound on the back foot when trading lines opened on Monday. It has been a tough week for Sterling, which has seen its value decrease by around three cents, or the equivalent of 3000 AUD on 100k GBP/AUD currency exchange.

I anticipate that the AUD will now find plenty of support again around 1.85, when it seemed as though the Pound was set for a run on 1.90 last week, when a Brexit deal looked imminent.

This is another prime example of how the markets may price in an expected political outcome, only to see the currency in questions value diminish when the expected result does now come to fruition.

Looking at the driving factors behind GBP/AUD and any updates or breakthrough in Brexit talks, will no doubt boost investor confidence and the Pound is likely to benefit as a result. Similarly any talk of a no-deal outcome again and it will likely have the opposite e effect.

Looking at the Australian economy and current slowdown in global trade is certainly having a negative impact. This, along with the current trade war between the US & China is causing investors to shy away from riskier currencies such as the AUD. We generally see commodity-based currencies such as the AUD lose value during times of global economic uncertainty.

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.