GBP/AUD exchange rates back to highs at the start of the month (Joshua Privett)

Australian Dollar Forecast: AUD Holds Firm Against US Dollar

GBP/AUD rates spiked overnight by almost 3 cents due to poor inflation figures released in the Australian economy. Inflation forecasts for the year were downgraded from 1.7% to 1.5% and are now further below the target of 2% set as the general rule of thumb for an economy to be considered ‘healthy’.

I was amazed wake up to these GBP/AUD rates, and feel this is a stark overreaction by the markets to the news. 

Firstly, 1.5% is still fantastic compared to other economies such as the UK’s, who are actually on the verge of negative inflation and have been in the red twice so far this year. This news has caused GBP/AUD rates to collapse in the past.

Secondly, the time of year should be considered. Each year the Australian economy benefits from a flood of tourists to enjoy their unique southern-hemisphere summer weather and activities. This flood of demand causes competing retailers, travel companies, hotels, etc, to reduce prices in a bid to snatch up the increased volumes of customers available in the market.

As inflation is a measure of price change, the lack of a rise doesn’t necessarily translate into a slowing economy, which is why I feel this is an overreaction for markets to instigate a slide against the Australian Dollar.

The clear indication that this was an overreaction is that when UK markets opened to the news the rates did not shift even higher. The news was released when Asian and American markets were still trading, but clearly Europe does not agree that this news justifies a mass sell off of AUD.

So these favourable buying levels for GBP/AUD are largely artificial and have already begun to tick down as markets stabilize from the news. 

I strongly suggest that anyone with Australian Dollars to buy should contact me on 01494 787 478 and ask the reception for Joshua to discuss a strategy for your transfer and discuss your options to maximise your AUD return. I can also offer a competitive quote on your transfer and have never had a problem beating the rates offered elsewhere.

These rates are unexpected, near multi-year highs and are essentially gift-wrapped, so if you have an AUD requirement but were not planning to complete a GBP/AUD transfer until next year, we can also discuss your options to ‘fix’ the rate at these currently favourable buying levels. jjp@currencies.co.uk