GBPAUD forecast – End of month profit taking – STEVE EAKINS

Increase in Risk Appetite Helps Support the Australian Dollar
Steve Eakins

The GBPAUD pairing has remained slow this week however this could easily be the calm before the storm.  The next few days I am confident the volatility will return and with it opportunity for both buyers and sellers. The reason for this movement will come on Friday/Monday as traders start “profit taking” for February. This is when traders will need to reset their investment levels for March and recognise the profits made through February. The mechanics are as such:

  • A investment firm will invest the value X for the month
  • Over the month the investment moves up or down in value
  • At the end of the month the level of investment/risk needs to be reset to the original X figure
  • Traders sell or re-invest up to that target level of investment for the following month.

So when this “profit taking” the demand for the currency is impacted along with its value.  The art is recognising when this is happening and whether it will be moving up or down within that period.  If you are looking at trading this week make sure to get in contact to discuss your situation with an expert and to find out how the above could impact your situation. Contact myself for a more personal approach by calling the normal number or emailing me directly at [email protected]

Next week I also expect the movement to remain volatile, the general view is that the positive GBPAUD trend will continue however at a much smaller speed than we have experienced over the last 3 months. The UK economy is still growing faster than many had expected, the FED has still over 80% of their QE program to reduce impacting the demand for the AUD and the demand for Australian resources are falling as Chinas growth slows.  It will however not move in a straight line meaning time a trade remains integral to getting the best price.  Knowing the data which will drive the markets, the expectations of what will be seen and when it is scheduled for release are all important. Here we assist with this service along with giving our clients access to award winning exchange rates so that you can see a saving.

If any of the above is of interest, or if you would like to talk through your personal situation with an expert feel free to get in contact.  My name is Steve Eakins and I can be contacted either via email at [email protected]or 01494 787 478.