Sterling has managed to make consecutive gains against the Australian Dollar since falling back below 2.10 this week. GBP/AUD rates are now sitting comfortably above 2.12.
The reason for this further rise beyond 2.10 was consecutive poor data from China on Monday and Tuesday night which caused some of the recently regained confidence in the Australian economy to dissipate. Monday saw terrible import data and Tuesday compounded the negative views with very low inflation data.
This poor inflation data came just a day after the UK entered deflation for only the second time since 1960. So the gains for the Australian Dollar against Sterling seen on Tuesday have been equally reversed today.
So there is a current quagmire in how to decipher the current trend in GBP/AUD. It has been negative recently, but further caution caused by China is now matching the apprehension about the stability of the British economy. A solid foundation of growth built on record-low inflation is a volatile mix and many are relieving themselves of their Sterling as a result.
So how about the Australian economy itself?
This will likely be the tie-breaker in the short-term. Overnight employment figures for the Australian economy will be released and forecasts are for a mixed bag.
While the overall unemployment rate is set to go up by 0.1%, there are still expected to be a net gain in jobs for the economy during September. This essentially means that more people are looking for work after finishing their studies or ahead of the jam-packed tourist season, even though more jobs were added to the economy.
It is difficult to see how markets will interpret this, I believe we will only get sharp moves if there are any big surprises. With the recent rise in commodity prices, as well as the tourist season looming for the Australian summer, if there is to be a surprise I would bet it would be for more jobs than expected, which in turn would spell Dollar strength.
Again it does seem more likely that the data released tonight will be uneventful, but with the potential for more positive data, it seems that those with an AUD requirement at the greatest risk of waiting are AUD buyers. As such I strongly recommend that anyone with AUD to buy should contact me overnight on [email protected] for a free quote on your transfer, and if you do not need you AUD straight away, we can discuss a strategy on how to maximize the value of your Sterling in the long-term.
Anyone with AUD to sell can do the same and we can figure our a strategy for your situation, and I can explain the options open to you to take advantage of any spikes on the market, day or night. Joshua Privett – 01494 787 478