Will the Australian Dollar continue to Weaken?

In the last two weeks we have seen a slow pattern emerging of the Australian Dollar weakening against Sterling.  The recent data that has been coming out of China is showing a slowdown and this can be highlighted when looking at the luxury brand Burberry. The company has seen a 20% drop in its share price as confidence in China seems to be waning. Certainly this could be seen as only a small signal but to me it could be the start of luxury brands beginning to suffer with a Chinese slowdown. If this is the sign of things to come we could see a weakening of the Australian Dollar going forward. The Aussie appears extremely overvalued and its reliance on Chinese growth has seen the Aussie GBP rate hit recent highs in the last twelve months. Surely the Australian economy will suffer if the exchange rate continues to stay where it is so long term it could be argued that we cannot see GBPAUD exchange rates continue at these levels.

With the EU struggling to reach a budget agreement and with proposals for the overall budget for 1,033bn some countries are arguing that this is too much. The European Commission meets every six years to discuss these targets and this represents 1% of European income so it doesn’t seem like much to ask but having said that money seems hard to come by in Europe at the moment so every spare cent needs to be accounted for. Indeed, with this instability again affecting the Euro the lack of confidence means less risk appetite for the Australian Dollar and therefore a rise for GBPAUD exchange rates.

With slowing gloabl grwoth and falling commodity prices in Australia this means that the government’s tax base is being weakened and they may need to look for alternatives to increase savings. The Reserve Bank of Australia next meets on October 2nd to decide what to do with interest rates.  Personally, I would be surpirsed if there is any change but do keep in contact with me during the week to find out if the forecast changes.

If you have any queries or questions about how to save money when transferring Australian Dollars then feel free to contact me directly Tom Holian teh@currencies.co.uk and I look forward to hearing from you.