Tag Archives: Brexit

Could Sterling face further losses against the Australian Dollar? (Daniel Johnson)

Inflation a growing concern for the UK

The pound continues to weaken against the Australian dollar. The latest UK interest rate decision did the pound no favours. Interest rates closely linked to inflation. Inflation is  a major concern for the UK at present and at one point threatening to breach 3%. We have now seen a a drop to 2.6% and many believe this is a negative for the economy. I do not share this view, inflation is only beneficial if average wage growth is close to being in sync, it is currently some way behind inflation at 1.8%. If consumers are not prepared to pay over inflated prices for their goods and services this is when growth dwindles and there is the potential for a recession.

Their have been rumours circulating the Bank of England (BOE) could hike interest rates should inflation rise above 3%, so the fall to 2.6% was seen as negative to investors and the pound fell in value as a result. The previous monetary policy committee (MPC)  vote came in at 5-3, with three members in favour of a hike. Kristin Ford has left the MPC however, and has been replaced by Silvana Tenreyo who voted to hold rates. The vote now at 6-2 did little to help Sterling against the Euro.

RBA fear the strong Aussie could damage exports

Down under the strength of the Australian dollar is a concern due to the heavy reliance on trade partners buying Australian raw materials. Reserve Bank of Australia (RBA) governor Philip Lowe will know doubt attempt to jaw bone and talk down the value of the Aussie rather than making a  more drastic change to moneatry policy. I doubt jawboning will have the desired impact.

Hans Redeker from Morgan Stanley recently stated “We expect the AUD to continue to move higher in the short-term as yield-seeking behavior continues,”

The high interest rates  offered in Australia are currently very attractive to the investor, especially considering the weaning of the US dollar of late.

In order for the pound  to rally we need a stable government and the stance on Brexit to be made clear. A rise in inflation could force the BOE’s hand on a rate hike, but this it is not a healthy move for the economy and a long shot if you are hoping for this to bolster Sterling against the Aussie.

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 16yrs, 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 . (Daniel Johnson) Thank you for reading.

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.

Sterling climbs against the Aussie Dollar as the RBA warns of strong currency putting pressure on Australian economy (Joseph Wright)

The Pound to Aussie Dollar exchange rate hit 1.66 in the early hours of this morning, and this was the first time in over 2-weeks that we’ve seen the Pound trade this high.

The headline comments from the Reserve Bank of Australia in the early hours came in the form of a warning, saying that the ‘Aussie’s recent strength has been placing pressure on the Australian economy’ and this resulted in the selling off of AUD.

The RBA appears to be fairly neutral in its outlook for future growth after suggesting that forecasts for the Australian economy remain unchanged (currently at 3% annually).

The fall for the Aussie dollar came after data showed that sentiment within the Manufacturing sector strengthened, along with the positive move of 7% increase in the value of Iron Ore which has given AUD a boost.

It appears that the RBA would prefer a weaker Aussie Dollar and I think that those planning on converting Aussie Dollars into Pounds should consider the gains they’ve seen recently, and whether they think the Aussie can continue to strengthen at its current rate.

This Thursday is likely to be a busy day for Sterling exchange rates as a whole and I expect to see the GBP/AUD rate see volatility. Thursday is being billed as ‘Super Thursday’ and if you would like to discuss why in future detail do feel free to get in touch.

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.

 

Pound to Australian Dollar improves despite IMF downgrade, is this a sign that the Pound is oversold? (Joseph Wright)

I wrote last week about how some analysts as well as members of the Reserve Bank of Australia are becoming concerned that the Aussie Dollar is becoming overvalued and higher than it perhaps should be, and I believe we will continue to hear similar commentary in the upcoming months.

Earlier in the year the Pound to Aussie rate hit the mid 1.70’s whereas the pair are now trading closer to 1.50 than 1.60. Since the Brexit the lowest the pair have fallen to is to a mid-market level of 1.59 so i don’t think we can rule out another move to these low levels as we don’t require the GBP/AUD pair to do something they haven’t in recent history.

In the early hours of this morning the Pound started off on the back foot after the International Monetary Fund (IMF) downgraded both the UK and the US growth forecasts for the rest of this year.

Throughout the day though the Pound has climbed, not just against the Aussie but across the board as the Pound as gained against all major currency pairs today.

Despite this boost I think that we could see the Pound trade at lower levels, especially if the UK inflation rate continues to under-perform and the likelihood of a rate hike from the Bank of England continues to dwindle.

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.

Australian dollar predictions against sterling

Over the last two weeks the Australian dollar has been making inroads against the pound and GBPAUD exchange rates have plummeted 7 cents. To put this into monetary terms for any clients that are purchasing Australian dollars with pounds a 400,000 Australian dollar purchase will now cost just under an additional £10,000. However on the other hand for clients converting Australian dollars into pounds this is certainly something to smile about.

The latest minutes from the Reserve Bank of Australia gave no clear indication that the RBA will be  raising interest rates anytime soon however the minutes were seen as bullish as it is clear that the next move will be to follow the trend of other central banks and raise the base rate.

UK inflation data disappointed last week which has relieved some of the pressure the Bank of England were receiving. The Bank of England set an inflation goal of 2% and at present even with the drop, inflation sits at 2.6%. Many economists were predicting if inflation rose above 3% we would get clear direction from the Governor of the Bank of England and an interest rate hike early next year was likely. However with inflation now falling the chances of a rate hike have diminished.

Since the UK public decided to vote out of the EU, the pound has lost approximately 15% against all of the major currencies. Brexit negotiations I believe will continue to weigh down on the pound for the foreseeable future as I don’t believe a deal will be struck anytime soon in regards to the divorce settlement or the rights of EU citizens living in the UK.

Therefore for Australian dollar buyers purchasing currency on the back of a positive move would be my strategy as I do not foresee any substantial gains being made over the upcoming months. Australian dollar sellers may wish to take advantage of the 7 cent spike in their favour or should continue to monitor the market and try to covert in the 1.50s.

However Australian dollar sellers should be cautious as the National Bank of Australia believe the Australian dollar is overvalued which I actually agree with. At the moment currency investment continues to land on Australian shores due to the high interest rates.

The main data releases to look out for this week are UK GDP numbers Wednesday morning which are set to show a decline which could lead to further sterling weakness and the Federal Reserve interest rate decision Wednesday evening. It is unlikely the Fed will raise interest rates and I expect a neutral statement by Janet Yellen shortly after. This could lead to a further sell off of US dollars and the Australian dollar could benefit.

For people that are converting pounds and Australian dollars for the first time, it is essential that you get the very best exchange rates. If you have used a brokerage for many years or have been referred a brokerage I strongly recommend you compare rates to make sure you get the best price possible and therefore save money. This simple exercise takes two minutes and in the past I have saved clients hundreds and in some instances thousands of pounds.

My direct email is drl@currencies.co.uk Dayle Littlejohn. Alternatively call me Monday morning on 0044 1494 787 478 and ask the reception team to be put through to Dayle Littlejohn.

How the Bank of England and Reserve Bank of Australia could impact GBPAUD exchange rates (Dayle Littlejohn)

For people that are reading this website for the first time as they need to purchase a substantial amount of Australian dollars for a business related matter or a property purchase it’s is important to understand that interest rates have a major impact on the currencies value.

Earlier this week the Reserve Bank of Australia’s minutes confirmed the RBA are unlikely to hike rates anytime soon. This was a surprise as the Governor of the RBA gave a hawkish press conference last week and many economists had been speculating that Australia could follow in the US footsteps.

It was important to note the RBA did confirm it is unlikely rates would be cut further as, more liquidity in the housing market would have a detrimental impact on the Australian dollar longer term.

The message the RBA gave earlier this week is slightly different to the Bank of England’s. Inflation levels have risen above the BoE 2% target and members of the Bank of England are now calling for an interest rate hike. Nothing has been confirmed however speculation is rising and a hike looks likely towards the end of the year or early 2018.

Therefore looking ahead the pound could trend higher against the Australian dollar if we only looked at interest rates, however there are many factors that influence exchange rates. For example Brexit negotiations are on going and if these negotiations grind to a halt which I think is likely we could see substantial falls in the pounds value.

When converting GBPAUD exchange rates it is important to understand political events are having more of an impact than economic data therefore it is very difficult to predict the future. My job is to outline the options to clients with the potential upcoming economic events, and the client makes the decision of when to convert.

If you are buying or selling Australian dollars and would like to know your options and have access to fantastic exchange rates feel free to email me on

If you are trading GBPAUD in the upcoming weeks, months or years and want to know your options whilst saving money 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! **

 

GBPAUD breaks through 1.70 (Dayle Littlejohn)

In recent weeks the pound has been losing ground against the Australian dollar and exchange rates have fallen from 1.75 to 1.67. However today Governor of the Bank of England Mark Carney has given Australian dollar buyers something to smile about, as UK interest rates could be hiked in the upcoming months, which would provide strength for sterling as investors look for higher returns on their investments.

The Governor announced today that the MPC will be debating interest rates in the upcoming months and a rate rise all depends on business investment, wage growth, Brexit negotiations and costs for labour.

Off the back of the positive news for the pound GBPAUD has now breached 1.70. To put this into monetary terms the 3 cent improvement this week will save clients £10,000 when purchasing 1,000,000 Australian dollars.

Looking further ahead I expect the pound to continue the upward trend for the remainder of the week and into next week as UK Prime Minister Theresa May should be able to put the election behind her when MPs vote on the queens speech later this week.

The leader of the opposition Jeremy Corbyn has stated he will try to make amendments to the Queens speech but in reality I can’t see any conservative MP voting against their own party, therefore this story should be over by this time next week.

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! **

GBPAUD exchange rates fall to a 8 week low! (Dayle Littlejohn)

Pound vs Australian dollar exchange rates have reached an 8 week low this week due to sterling devaluing and the Australian dollar strengthening. To put this into monetary terms over the last 2 weeks exchange rates have dropped 5 1/2 cents which means a 200,000 Australian dollar purchase is now £3,850 more expensive.

Starting with the Australian dollar GDP numbers have remained resilient this month, and positive business sales growth coupled with increased consumer spending has strengthened the Australian dollar. In addition the Philip Lowe (Governor of the Reserve Bank of Australia) also commented earlier in the week that the global economy is in better shape than previous years which is helping the commodity currencies. This was a surprise statement as iron ore prices continue to remain under pressure due to a slow down in China.

As for the pound the Governor of the Bank of England gave a dovish statement yesterday and confirmed the UK are not in the position to raise interest rates anytime soon even though three members of the Bank of England voted to hike rates only 6 days ago. Furthermore Brexit negotiations have begun and are putting pressure on sterling as the market is nervous about a deal being struck in regards to the divorce settlement.

In my opinion it is impossible to predict how Brexit negotiations will impact the pound. Positive news will strengthen the pound negative will do the opposite. I am optimistic that deal will be struck eventually however other traders on the floor are not. If you are purchasing pounds with Australian dollars or vice versa I would recommend getting in touch and I will keep you up to date with regular information until you are ready to convert drl@currencies.co.uk.

If you are buying or selling Australian dollars in the upcoming months and want to achieve rates of exchange that are better than your bank, whilst receiving regular economic information feel free to email me with the currency pair (AUDGBP, AUDEUR, AUDUSD) the reason for the transfer (company invoice, property purchase) the timescales you are working to and I will respond with my forecast and the process of converting currency. My direct email address is drl@currencies.co.uk and I look forward to receiving your email.

Volatility expected on GBP/AUD in the next 24hrs as government announcment expected (Daniel Johnson)

Queens Speech has potential to cause movement on GBP/AUD

Tomorrow we will see the state opening of parliament and the queens speech which had been delayed as the conservatives and the DUP thrash out a deal. The UK is currently in political limbo at present and this has been very detrimental to the pound, if we go by what is taught in economics class you would expect the pound to rally once there is a government in place. It is common knowledge that we will see a conservative-DUP  coalition and the market will have largely factored this into the current GBP/AUD rate.  What I think will have more bearing is what plans the coalition have for the country particularly regarding the brexit strategy. A change from Theresa May’s hard brexit plan could well occur, as the DUP would favour a soft border between Northern Ireland and Ireland, this would mean a move away from May’s plans of border control and a hard brexit. It is important to also note that senior members of the conservatives have threatened to challenge May’s leadership if she changes her plans on  a hard exit. If you have a currency trade to perform involving GBP/AUD you need to be in touch with an experienced broker if you want to take full advantage of short term spikes. There are a number of options to ensure any tempting peaks which emerge are not missed and if you would like me to help, be sure to get in touch in quickly so I am aware of your situation and can assist in maximising your return. My details are at the bottom of the article.

 

RBA Minutes gives an indication of what could influence future Australian Dollar value

The Reserve Bank of Australia (RBA) minutes  take place two weeks after the interest rate decision. They provide an account of policy discussion and also how the committee voted. This can give a real indication of what monetary policy changes can be made in the future and can influence GBP/AUD.

The minutes took place during the early hours of this morning and is was much the same as the previous meeting, interest rates were kept on hold at 1.50%. Housing and employment will be key factors in interest rate judgement as detailed in the minutes.

Data will continue to hit the wire throughout the month regarding these key indicator, affecting the value of the Australian Dollar consistently. Feel free to get in touch if you would like me to keep an eye on these releases for you, I can contact you if an opportunity presents itself.

Should you find our information useful and you would like me to assist with your trade I will be happy to help you personally. If you inform me of the details of your trade I will endeavour to provide a free trading strategy tailored to your situation. We are authorized by the Financial Conduct Authority so you can trade with safety and confidence. Our reputation at Foreign Currency Direct is impeccable, we also offer the most competitive rates of exchange and if you have a current provider I am willing to perform a comparison and I am very confident I can demonstrate a significant saving. I look forward to being of help. I can be contacted at dcj@currencies.co.uk. (Daniel Johnson)