Tag Archives: bank of england

Will pressure on Sterling result in further falls for GBP/AUD, even if the RBA doesn’t want a stronger Aussie Dollar? (Joseph Wright)

There has been a lot of talk recently from both economists as well as the Reserve Bank of Australia that the Aussie Dollar is an overvalued currency.

Of all the major currencies the Aussie Dollar is the 4th best performer so far in 2017, and whilst this sounds like a positive thing to many the reality is an overvalued currency isn’t great news for export driven currencies due to the fact that it makes purchasing goods from Aussie more expensive, and therefore negatively impacts the economy.

The issue the RBA have is that cutting interest rates again in order to stem demand for the currency isn’t easy, as the likely market reaction within the property market would be negative. This is why I don’t think there will be a rate cut, as the property market is already overheating and if they make mortgages even more affordable that problem could spiral, especially in the East-cost of the country where property prices are already very high and unaffordable in many cases.

The Pound is coming under increasing pressure due to the Bank of England’s decision not to raise interest rates, and also just yesterday it emerged that the BoE’s forecast for the UK economy in 2017 isn’t going to grow at the rate they had previously expected.

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.

 

Interest Rate Decision and Inflation Report set to cause volatility (Daniel Johnson)

Inflation a major concern for the UK Economy

The pound is suffering against the majority of major currencies. The UK economy was in a strong position before the call for a referendum. Cameron used it as a bargaining chip against Brussels which has had drastic results. Politicians with their own agendas has caused this monumental fall for the pound. Boris jumping on the leave train with Farage and then May failing to gain a majority victory in the election.

Inflation is now a key issue,  it hit a peak of 2.9% The most recent figures showed a fall to 2.6% which caused Sterling to weaken. I believe this to be a good thing as the closer inflation is to average wage growth  the stronger the UK economy. Average wage growth currently sits at 1.8% some way for current inflation levels. If there is a large gap between inflation and average wage growth people may stop purchasing goods and services that are now over valued. If people do begin to tighten the purse strings there is the potential for a recession.

Sterling fell in value following the fall in inflation as the chance of a rate hike became less likely. If inflation had continued to rise there was the possibility the Bank of England would choose to raise interest rates. Investors are less likely to move to the pound due to this, I do not feel monetary policy change is the solution to the UK’s problems. A stable government is essential for Sterling to rally and we also require a firm stance on Brexit talks, although I wouldn’t hold my breath.

Super Thursday could cause big swings on GBP/AUD

Thursday could cause high levels of volatility on GBP/AUD. We have the UK interest rate decision followed by the results of the Monetary Policy Committee vote. The nine members vote to lower rates, keep them on hold or raise rates. If there is a change in how the members vote, expect the markets to react. We also have the eagerly anticipated quarterly inflation report which is sure to cause volatility. Hints toward how monetary policy will be implemented going forward will be given at Mark Carney’s speech following the data releases.

Australian Trade Balance Data could influence GBP/AUD

Down under trade balance figures are released in the early hours on Thursday morning. Australia is heavily reliant on the health of its exports and this has the potential to impact GBP/AUD. The Reserve Bank of Australia (RBA) are concerned with the strength of the Australian Dollar as it is making goods and services more expensive for oversea buyers. Although I would be surprised to see any change in monetary policy short term I would expect jawboning from RBA governor Philip Lowe to try and artificially talk the value of the currency down in coming weeks.

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 (Daniel Johnson) on dcj@currencies.co.uk and I will endeavour to get back to you as soon as I can.

Will GBPAUD rise or fall in the coming weeks?

The Australian is really benefiting from much improved certainty around the outlook on interest rates. Interest rates are a key factor in determining the relative strength and weakness of a currency and this is of vital importance for the Australian dollar. Viewed by investors as a good currency to hold because of the higher interest rates, the Australian dollar will rise in value if investors believe that interest rate will go up in the future. If you are buying Australian dollars the shorter term outlook is not great, it is likely the Aussie will make further gains. If you have a transfer to make buying or selling Australian dollars this information will be vital to the rate in the future.

The Reserve Bank of Australia confirmed that they could well be looking to raise interest rates in the future which has helped the Australian dollar to rise against the pound. The pound is actually much weaker too since Inflation has been falling in the UK at the latest release, this reduces the chance of an interest rate hike. Clients looking to buy or sell Australian dollars for pounds could see GBPAUD test closer to the 1.60 in the next few weeks but longer term it might well recover. Only two weeks ago we were headed to 1.70 so to be where we are now is a surprise in some respects. Events could quickly change again!

News that might help would be the US dollar strengthening again. The USDAUD rate is of real importance to GBPAUD since as USDAUD is the most heavily traded currency pair, the movements on US dollar to Aussie will ‘weigh’ on GBPAUD rates. So for example lately the US dollar has been weakening, this has helped the Aussie to rise which has affected GBPAUD too.

GBPAUD is on the slide but could quickly make a recovery! Every 1 or 2 cents on a big volume of currency can make a difference of thousands so if you have a transfer to consider and wish to get the best rates and help with the timing of any deal please speak to me Jonathan Watson by eamiling jmw@currencies.co.uk.

Thank you for reading and I look forward to hearing from and assisting you.

 

Austalian dollar soars against sterling (Dayle Littlejohn)

Earlier this morning the Australian dollar spiked against sterling by over 1.5%, when the Reserve Bank of Australia released their latest minutes. Investors piled into the Australian dollar off the back of the news that the cash rate could increase to 3.5% from 1.5% and not have a negative impact, which implies the RBA could also think about raising interest rates in the months to come.

Personally I think this is a spike in the market to take advantage of for Australian dollar sellers buying pounds as I believe the Australian dollar is overvalued. This is supported by the National Australian Bank who released an article last week with similar views. With the property market being over inflated in certain major cities (especially east coast), I find it difficult to see how the RBA will alter the interest rate.

If they make the cut this will entice people to take out larger mortgages where as a hike would strengthen the Australian dollar further and in turn have a negative impact on Australian exports.

Looking further ahead Australia are set to release their latest Unemployment rates and Employment change numbers Thursday morning. Unemployment numbers are set to slightly rise therefore some of the gains we have seen this morning could be reversed.

As for the pound UK inflation is released in 30 minutes. If the figure exceeds 2.9% this could put further pressure on the Bank of England to raise interest rates and again some of the gains for sterling buyers could be lost. To find out how the inflation numbers impact the market feel free to email me and I will let you know the outcome later this morning.

If you are trading GBPAUD in the upcoming weeks, months or years feel free to email me with the reason for your conversion (company invoice, buying a property) and the timescales you are working to and I will email you with my forecast and the process of using our company drl@currencies.co.uk.

** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you minutes and in the past I have saved clients thousands! **

Will next week bring further movement for the GBP/AUD pair? (Joseph Wright)

Next week there are a number of key data releases out of both the UK and Australia, which could result in a move away from the current exchange rates available.

The Pound has been weakening in recent weeks after some disappointing data releases in a number of sectors within the UK, which is why I think those following the Pounds value against the Aussie Dollar as well as other major currency pairs should be aware of next weeks releases.

An already under pressure Pound could be put under additional pressure in the early hours of Tuesday morning at the Reserve Bank of Australia’s Meeting Minutes. A bullish RBA could result in further gains for the Aussie Dollar against Sterling which could push the AUD/GBP pair above the key physiological level of 0.60.

Then at 9.30am on Tuesday morning there will be an inflation reading in the UK, which is a key reading at the moment as the rate of inflation within the UK is currently above the Bank of England’s current target of 2%. I expect a low reading to result in Sterling weakness as it will decrease the likelihood of an interest rate hike in the UK in the short term future.

The is also an Inflation Report Hearing next week within the UK which could impact Sterling exchange rates for the aforementioned reasons.

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.

Will GBPAUD rise back above 1.70??

The expectation for GBPAUD exchange rate is rather mixed with the pound really struggling to make much headway following a tough week. Tuesday saw GBPAUD drop as members of the Bank of England confirmed they will not be so positive about raising interest rates. The overall belief the pound would rise if the Bank of England raise interest rates has been supporting the pound but this is now looking less likely. The Australian dollar has also been benefiting and rising because the US Federal Reserve have been slightly move dovish (soft) in their approach towards raising interest rates.

If you are buying Australian dollars with pounds there is a belief we could see 1.70 but I think it is more likely the GBPAUD rate will actually drift lower. This is because there are so many negative factors surrounding the pound and I believe market conditions are much more supportive for the Australian dollar to rise. This largely stems from the fact the Australian dollar is a commodity currency and will appreciate in value when investors seek a higher return.

If you need to buy Australian dollars with pounds the short term forecast is not looking so good. Trading conditions seem to favour sterling slipping, I mean just what would actually lead to the pound rising? Uncertainty over the Brexit and the UK economy indicates to me the pound will remain on the back foot. I also believe the Australian dollar will retain much of its strength in this current climate.

If you have a transfer to make then getting all the information available and tracking the latest trends is key to helping maximise your transfer. A 1 cent improvement on a £200,000 transfer buying Australian dollars could achieve you an extra 2000 Australian dollars!

For more information at no cost or obligation please speak to me Jonathan by emailing jmw@currencies.co.uk. We are expecting some really interesting movements on the GBPAUD rates, of course it won’t be just downward, there will be spikes to take advantage but you need to be prepared! This is what we can help you to monitor and achieve.

Thank you for reading and I look forward to hearing from you.

 

 

Pound to Australian Dollar exchange rates expected to worsen (Joshua Privett)

Pound to Australian Dollar exchange rates were taking a clear hammering at the beginning of the week, and very little of it was due to events in Australia.

Events in the UK and globally have played well into the hands of anyone considering selling Australian Dollars to buy Sterling. Just since July 7th they have gained over 4 cents against Sterling with the global climate still pointing to further improvements.

Firstly, the concrete stuff. One of the backtracks on Sterling has come from a reversal in the enthusiasm for an interest rate hike in the UK in the short-term. Slightly lower inflation outlooks mean the pressure to raise rates in order to control prices has lessened, and on Tuesday two members of the Bank of England Monetary Policy Committee confirmed this.

Therefore, without a medium term expectation of a rate hike, a key pillar of support for Sterling has been lost. Making it more likely for further gains for AUD sellers in the short-term.

The other helping hand for sellers came from the US.

Uncertainty surrounding the US Dollar causes capital flight to go elsewhere. Given the relatively high interest rate available in Australia, this can be a key beneficiary in these situations. As investors flee to the AUD, it’s value sees a parallel boost through demand.

The latest Trump scandal comes under that bracket. Could this be the smoking gun for the Trump Presidency? Markets were certainly concerned, the Dollar suffered from a mass sell-off of stocks in reaction to the news.

Whether this scandal will be swept under the rug or continue to undermine confidence in the US political apparatus is the unknown factor here.

However, this does point to renewed urgency for anyone planning a foreign currency transfer to buy Australian Dollars to ‘get their skates on’.

I strongly recommend that anyone with an Australian Dollar based currency requirement should contact me on jjp@currencies.co.uk to discuss a strategy for your transfer aimed at maximising your currency return.

You can also contact me directly on 01494 787 478 and ask the reception team to speak with Joshua.

I have never had an issue beating the rates of exchange on offer elsewhere, so a brief conversation could save you significant sums of money on a prospective transfer.

 

Australian dollar overvalued? (Dayle Littlejohn)

In recent times major central banks including the European central bank, Bank of England, Bank of Canada and the Federal Reserve have been taking a hawkish approach and indicating that they could be raising interest rates in the near future. When a central bank raises interest rates we tend to see the currency strengthen as investors flock to the currency.

However the tone from the Reserve Bank of Australia was far from hawkish when they released their latest monetary policy decisions over a week ago. The National Australian Bank believe that the Australia dollar is overpriced at present and if the RBA gave a hawkish statement the dollar would be purchased further and therefore increase in value.

Looking further ahead the NAB believe the Federal reserve will continue to raise interest rates which will mean investment will leave the Australian dollar and strengthen the US dollar, and I have to agree with the predictions.

In relation to GBPAUD exchange rates I expect the Australian dollar to devalue slightly however the golden question is whether this will outweigh Brexit? I fear at any point Brexit negotiations could reach a stumbling block and therefore the pound would weaken dramatically.

If you are buying or selling Australian dollar in the upcoming weeks, months or years feel free to email me with the reason for your conversion (company invoice, buying a property) and the timescales you are working to and I will email you with my forecast and the process of using our company drl@currencies.co.uk.

** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you minutes and in the past I have saved clients thousands! **

What factors could cause the Aussie Dollar to weaken? (Joseph Wright)

Last week the Pound found itself under pressure after a raft of bad data out of the UK has resulted in concerns in a slowing down of the UK economy.

Data showed slowdowns in the manufacturing, construction and importantly the services sector and although the readings were in line with previous readings when GDP is running at 0.4%, the economy is slowing as we enter the 3rd quarter which is a negative sign for those hoping the Pound will climb as the year progresses.

The Reserve Bank of Australia disappointed Aussie Dollar bulls and those hoping the Aussie Dollar will climb last week. Many had hoped for indications of future interest rate hikes from the RBA but these comments never came, with many analysts now confident of a rate hike this year.

The price of Iron Ore has firmed up recently offering AUD some support, but the mixed messages the markets are receiving regarding China’s economy (and whether or not the figures they release are 100% truthful) is likely to weigh on the Aussie Dollars value.

The issues surrounding the housing market overheating in parts of Australia is also likely to be a talking point, and it’s quick market movements that we can help our clients take advantage of in a number of different ways, so feel free to get in touch if you wish to discuss this in further detail.

If you have a 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.

Disappointing data this week results in the Pound weakening, is the UK economy slowing down? (Joseph Wright)

Throughout the week there has been a series of disappointing data releases out of the UK, along with data this morning from Halifax confirming that property prices within the UK have fallen by 1% with UK house price growth falling to a four-year low.

We found out earlier this morning that manufacturing production within the UK fell last month from the month before, whilst industrial production has also fallen on an annual basis.

The construction sector has also experienced a slowdown recently, and with the raft of bad data released this week it may leave many within the marketplace re-evaluating whether there is much of a chance of an interest rate hike this year.

Unicredit (a major Italian lender) this week forecasted a potential spike of up to 4% if there is a rate hike this year, although personally I cannot see this happening irrespective of the UK’s inflation levels and I think that the Pound to Aussie Dollar exchange rate is more likely to fall between now and the end of the year.

There is talk of a slowdown in the Aussie economy also, but with the UK entering such a crucial time with Brexit negotiations I cannot see Australia’s issues overpowering those of the UK.

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.