Buying Australian Dollar rates undercut further by Brexit (Joshua Privett)

Could this Key Week for Brexit Negotiations Impact AUDGBP?

It seems buying Australian Dollar rates have begun to take further hits, given that most thought the slide had halted following the decision to cut interest rates in the UK last week, the continued movement has been extremely surprising. This has created excellent opportunities for Australian Dollar sellers, and concerns for those considering buying Australian Dollars in the future.

The Pound has had a tough run of fortune since the beginning of this week. Date on industrial output, financial service growth, and house price stagnation has pointed to a 50:50 chance of a recession in the UK over the next 12 months.

In this current climate, this presents a double hurt for anyone considering buying the Australian Dollar.

The cut in UK interest rates last week has presented a disparity between UK based interest rates and other economies, most notably the Australian economy which now has an interest rate return 6 times higher than that of the UK.

However, even at the same time last year the UK had an interest rate of 0.5% whilst the Australian Dollar held a rate at 2% – so four times higher, yet buying Australian Dollars were still at 8 year highs. What matters here is context.

The Australian Dollar is normally seen as a riskier currency due to its heavy dependence on commodity prices for its value – so a higher interest rate doesn’t normally make it as attractive a currency to hold compared to more stable currencies. But this stumbling block is removed when the UK votes to leave the EU, and is why we’re seeing this starting to become telling and demand for the AUD is still increasing despite expectations that this would tail off.

In the medium term, with this immediate impact on the Pound, it seems like the pressure on buying Australian Dollar rates will remain. On a personal note I moved to Australia in 2009 when rates were even lower than they are currently, so there is certainly room for further falls.

In the short-term, as always in the currency markets, there are normally still opportunities to be found. Overnight tonight Chinese performance data across their retail and industrial sectors, as well as a measure on their foreign direct investment will be released – all of which are expected to show some stagnation in line with the dampening effect the announcement of the Brexit has had on global economic activity.

As such Australian Dollar buyers who have a requirement over the next few months may be wise to seize any opportunities which may emerge in the short term to cover the potential for any further losses.

I offer a very proactive service to notify anyone with a buying requirement of any favorable spikes or events to have on your calendar which may provide some profitable movements. There are also tools available through a specialist currency brokerage that allow customers to make the most of any fortunate improvements in exchange rates.

I have never had an issue beating the rates of exchange offered elsewhere, so feel free to email me overnight on [email protected] or fill out the form below to discuss your requirements in more detail and develop a strategy for your transfer.

Joshua Privett – 01494 787 478

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