GBP/AUD rates have remained fairly flat this week, with the pair continuing to float around 2.04 on the exchange. The Pound has found life extremely tough going of late and the reason we have seen rates fall away from the highs last year, has been attributed to a number of factors but what is clear in my mind, is that we are highly unlucky to see a recovery back to 2.10 in the short-term.
The UK is suffering due to a slowdown in our economic output, with a run of inconsistent data causing the Bank of England (BoE) to cut growth forecasts and this has sapped much of the momentum the Pound built up over previous months. Add to this our widening trade deficit (this means the cost of our imports far outweighs our income from exports) and it becomes easier to see why we are seeing a negative downturn for GBP.
In my opinion this all stems from the Pound’s strength last year, which made it extremely expensive for our trade partners to do business with us. A knock on effect of this is that Manufacturing & Production levels have now fallen and the BoE are trying to react by artificially devaluing the Pound to boost this facet of our economy. This stance is not likely to change anytime soon and therefore I would be surprised to see a major recovery for Sterling under the current conditions. The saving grace for those clients holding GBP, is that the Australian economy is in an even more precarious state and the on-going economic problems in China (Australia’s largest tared partners) means that the losses haven’t been as severe for GBP compare to the other major currencies.
The bottom line is that I would simply not be gambling on the current market. With increased volatility likely to remain as we move through the first quarter, any small improvement for Sterling should be considered and if we were to see 2.05 become available again, I would be tempted to secure any short to medium-term positions.
If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the reception team for Matt. Alternatively, you can email me directly on [email protected]