Will the Australian Dollar Recover against Sterling?

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The Australian Dollar has recovered against Sterling since last week after it hit 6 month lows. The general feeling within the market is that the movement was exaggerated but personally I feel the AUD is in for a troubled period. With negotiations breaking down to form a new coalition government in Greece the country is prepared for a new round of elections due to take place on 17th June. If a government cannot be formed the austerity measures cannot be agreed and if so the EU Bailout Fund is unlikely to put more money into Greece. It could be argued that the market has priced in this problem and that Europe will defend its Eurozone partners but we are in unprecedented times. This week there is very little news for the Australian Dollar so focus will remain on the ongoing European Debt Crisis.

Spanish bond yields have dropped which is encouraging for the Eurozone and reduces the cost of borrowing for Spain. The lowering of the risk of Spain defaulting has helped to push Australian Dollar back from 1.61 to 1.60 this morning. The G8 summit is currently working on a package to resolve Europe’s financial woes. retail spending has been up in Australia in April for the ninth consecutive month but the rate is slowing, again signs that Australia’s wider economy is slowing down. Indeed on Wednesday the Westpac leading index is released which measures 9 areas of economic activity. This will provide us with an insight as to how the economy is performing and could move the Australian Dollar either way.

Interestingly the Japanese Yen saw a huge strengthening last week as GDP figures came out higher than expectation. This also led to a small sell off os the Australian Dollar and another reason why Sterling strengthened to 1.61.  For further information about buying Australian Dollars feel free to contact me Tom Holian teh@currencies.co.uk quoting ‘Australian Dollar Forecast’ for preferential exchange rates or call me directly on 0044-1494-787-478.