Pound strengthens against the Australian Dollar after Friday’s falls (Joshua Privett)

Australian Dollar to Pound Forecast: Risk Sensitive AUD Likely to Remain Under Pressure

We begin the week with GBP/AUD rates operating between the normal boundaries of little notable movement, with the Pound recording just over a cent of gains against the Australian Dollar from where we began the day.

The final two weeks of each month are normally devoid of economic data, so this is traditionally the ‘quiet’ period of the month. Yet due to the ripples caused by the Brexit result, whilst rates seem range-bound between 1.74-1.77, there is still significant movement each day. With less liquidity in financial markets this is largely inevitable.

Rates rose today with news that financial markets in the UK had stabilised following the poor business confidence figures released in the UK on Friday. Even BBC commented on the bizarre relationship that whilst the Pound strengthened stock markets in the UK fell. But this is simply another lesson that markets operate on expectation – if the market drops lower than expected, then much of the weakness already priced into the market will be released and the Pound will be allowed more breathing room.

The late announcement today of talks for a free trade deal with China so soon into the new Government’s efforts to re-stabilize the economy also helped to shore-up confidence. This strength may even filter into tomorrow morning’s trading with Asian markets still yet to trade on the back of the news as they were closed when the information was released.

It is difficult to gauge how markets behave during these quieter periods, but often movements are minimal andI think we can expect that quieter periods, with the Brexit out of the spotlight will allow some of the pressure on the Pound to be lifted.

Some further opportunities for AUD buyers may present themselves on Thursday morning in the UK with the release of inflation figures for the Australian economy overnight – market expectations are for a fall from 1.3% to 1.1%, and this confirmation may see the Dollar weaken further (adding fuel to the argument that there may be an interest rate cut next month) making it a cheaper prospect.

I strongly recommend that anyone with an Australian Dollar requirement, whether buying or selling, should contact me on jjp@currencies.co.uk to discuss a strategy for your transfer in order to maximise your currency return. I have never had an issue beating the rates of exchange offered elsewhere, so a brief conversation could save you thousands on your transfer.