Chinese Surplus & UK Quarterly Inflation Report (Tom Holian)

A Good Start to the Week for AUDGBP
Tom Holian

We have had 2 interesting data results today including both Chinese trade surplus and the UK Quarterly Inflation Report which have had differing effects on Sterling vs Australian Dollar exchange rates during today’s trading session.

Trade surplus in China has increased to USD31.9bn during January easing concerns about a slowdown in China. The figure is 14% better than this time last year which helped to strengthen the Australian Dollar this morning. As the Australian economy is so heavily reliant on what happens in China it will be important to keep an eye on what happens in the world’s second largest economy during this year.

The prediction for 2014 is that China will have its worst year for growth for over ten years as last month both manufacturing and services data indicated a slowdown in China. If this is the case then we could be in for another difficult year for the Australian Dollar.

The recent return of strength for the AUD was down to the RBA’s statement which announced an end to their interest rate cutting cycle following the interest rate announcement early last week. Personally I think this move will be rather short lived so if you’re looking to sell Australian Dollars into Sterling it may be worth doing something soon.

By securing a forward contract this allows you to agree an exchange rate for a fixed period of time if you don’t have full funds available at this moment. For more information about different types of contracts when exchanging currency then contact me directly Tom Holian teh@currencies.co.uk

The UK Quarterly Inflation Report has sent Sterling in an upwards direction across all the major currencies including the Australian Dollar. Bank of England governor Mark Carney has said previously that interest rates will be increased once UK unemployment hit 7% or below. With UK unemployment measuring 7.1% at last month’s release this has put more pressure on the BoE to increase rates sooner than first expected.

However, this morning he announced that he expects interest rates to be at 2% by 2017 which has given Sterling a big lift during today’s trading session. The UK recovery has gained momentum recently and this means that the Bank have also increased their growth forecast for 2014 to 3.4% from 2.8%.

The unemployment data for Australia is due out early tomorrow morning so expect Aussie Dollar weakness is the figures are lower than expected.

If you have a currency transfer to make and want to save money compared to using a bank then contact me directly Tom Holian teh@currencies.co.uk