December sees GBP/AUD exchange rates subject to more non-traditional market forces

Australian Dollar Gains a Cent on EUR and USD in a Week

Regular readers of the articles posted on this website will note that GBP/AUD rates are largely dependent upon the economic performance of the UK relative to Australia.

With the holiday season beginning to wind markets down data on each country’s economic performance is becoming thinner, so less prominent forces normally operate in the background on currency markets are beginning to come to the fore.

Commodity prices tumbled at the start of the month as a knock-on effect of the sheer collapse in oil prices to their lowest levels since 2009. With Australia’s reliance on mineral exports, this is what caused GBP/AUD to rally back upwards to the current levels from lows of 2.04/5.

Now that prices have stabilised from the fall in oil prices and the US interest rate hike a few days ago, traditional end of year movements in commodity prices should help the Australian Dollar regain some of its recent losses.

This is unofficially called the ‘Santa Claus Rally’. This is where the remaining investors who haven’t closed up shop for the holidays take advantage of the reduced demand in the market and buy commodities. A lack of demand deflates prices, but this last-minute December rally sends prices in the other direction – to the benefit of the Australian Dollar, and making GBP/AUD purchases more expensive.

Combined with the background impetus the tourist industry installs into the Australian economy throughout their summer months, it seems there is going to be more risk than opportunity for those with a GBP/AUD buying requirement until January.

GBP/AUD rates have already fallen down by more than a Cent from the high of the morning to the low.

I strongly recommend that anyone with an upcoming GBP/AUD requirement should contact me on 01494 787 478 and ask the reception to be put through to Joshua Privett. I can discuss a strategy for your transfer with you, and these currently high buying levels, gifted from events at the start of the month, can be fixed until you require your Australian Dollars at a later date to avoid any harmful movements against your favour

Those with Australian Dollars to sell can do the same, and I can explain how best to ride any favourable movements in your favour before the New Year to their peak. jjp@currencies.co.uk