Buying Australian Dollar rates suffer as the Pound’s rally is tempered (Joshua Privett)

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

The Pound has come under further pressure once more today with the revelation that the positive surveys at the beginning of the month have come into question, with some of the recent gains for buying Australian Dollars reversing as a result.

Markit, the company responsible for key business confidence surveys in the main sectors of the UK economy, provided three surveys to begin the month which painted the picture of an overwhelming recovery in the UK following the initial shock of the Referendum. The two main surveys of the three were from Directors in the Manufacturing and Service industries (which together constitute over 70% of UK GDP) of the UK economy showed the largest single monthly confidence increase in over 25 years.

This euphoria about the UK’s economic future has likely come from the beneficial effects expected for the competitiveness of UK exports which naturally occur from a cheaper Pound, and the benefits from the Bank of England’s massive stimulus package in the wake of the Brexit vote to boost the financial services sector.

The heavy rally on the Pound was therefore justified, and is why GBP/AUD rates of exchange reached close to 1.77 at its peak last week.

However, today a reality check was given to UK markets. Whilst surveys measure future confidence, the current state of affairs is still in relative turmoil. Actual growth figures for the manufacturing sector actually contracted to the tune of -0.2% in the most recent monthly assessment by the National Statistics released today.

Furthermore, growth estimates for the UK economy have come out for the June to August period, and only showed growth at 0.3% in this period. We can assume that most of this was before the Brexit vote at the end of June given that recent performance in other sectors shown above has been quite concerning.

By bringing the spotlight back to the present the Pound has suffered, presenting further opportunities for Australian Dollar sellers at the expense of buyers. 

Moving forward we have Australian and Chinese import and export data coming in overnight which will likely lengthen the recent rally for the Australian Dollar against the Pound given the improvement in China’s situation and the commodity marketplace as a whole. As such forecasts for Australia’s trade deficit is that it will decrease by $400m on this next reading.

Whilst this should present better opportunities for AUD sellers in the short-term, next week should see some respite for the Pound as the Bank of England’s monetary policy press conference should yield some very positive forecasts from the representatives at the helm of the UK economy. Many commentators are quite excited for the potential here for buying Australian Dollar rates to test some of the upper limits available last Friday for a few hours.

With a mixed bag expected surrounding the Australian Dollar over the next two weeks, I recommend that anyone with an upcoming requirement should contact me on [email protected] to discuss the options open to you to approach to currency markets safely during this period and ensure any opportunities which emerge are seized in a timely fashion rather than missed.

I have never had an issues beating the rates of exchange rates elsewhere, and given that the average difference on GBP/AUD rates each day is over 1.6 cents currently a brief conversation aimed a well timed exchange could save you thousands.

You can also fill out the form below and I will be in contact as soon as possible.

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