GBP/AUD showing tentative falls ahead of tomorrow (Joshua Privett)

Sterling is about to enter a difficult few days on the currency markets, whilst the Australian Dollar is set for a further boost. Small drops today even with negative news in one particular area of the Australian economy is suggestive that buying rates for the Dollar are set to get more expensive as the week continues.

Overnight the Reserve Bank of Australia released the minutes from their most recent meeting last month, which hinted that current issues with inflation (which all global economies are facing) hasn’t ruled out rate cuts in the future. However, Glenn Stevens, the Head of the RBA has hinted about potential cuts for over a year now with no action, so the Australian Dollar only weakened against the Pound by around 0.75 cents.

These improvements were almost immediately reversed as UK trading opened in the morning for a few reasons:

First, the budget tomorrow is expected to show a UK Government on the back foot. Sweeping cuts are expected to be in the range of £4bn suggest an apprehensive view from the individuals at the helm of the economy for the year to come, particularly given the recent slides on global financial markets, this is no surprise.

Secondly, events in the US tomorrow should be watched closely.

In December the Australian Dollar lost significant value following the announcement of a rise in US interest rates, the first of its kind since the financial crises. This made the US Dollar more attractive and so many investors sold off riskier currencies to hold US Dollars, so the Australian Dollar lost value through lack of demand. Hence better GBP/AUD buying rates.

In the past, when the US has conducted their small interest rate rises it has resulted in 4 similar rises later that year. However, similar to the UK, due to recent slides on global markets this now seems very unlikely and the FED themselves have made explicit hints about delays.

Should these rises be delayed, many investors who had taken long-term positions on the US Dollar will be disappointed with the news, and likely go back to the Australian Dollar to enjoy the current gains available with interest rates at 2%. Here the opposite will see the Australian Dollar increase in value through a spike in demand, and see it become more expensive for those buying with Sterling.

I strongly recommend that anyone with an Australian Dollar buying requirement should contact me on [email protected] to discuss a strategy for your transfer in order to maximize your Australian Dollar return. 

I have never had an issue beating the rates of exchange offered elsewhere, and the current buying levels before the falls expected over the few days (and frankly months with a potential Brexit hanging over Sterling’s value) can actually be fixed for up to a year if you are worried about further movements increasing the cost of your transfer.

AUD sellers can also get in contact, and I can explain the best way to ride the expected movements in your favour to their completion within the time-period you have to make your transfer.