GBP/AUD rates have fallen during Monday’s trading, with the pair falling back below 1.66 at today’s low. The Pound has performed well of late, making again against all the major currencies, including the AUD.
The reason the Pound has prospered is due to a number of factors. Donald Trump’s now infamous election victory boosted the hope of a trade deal between the UK and the US, news which immediately brought back some investor confidence back to the UK, despite our impending Brexit. This positive feeling was solidified by a strong run of economic data, in particular last week’s UK Retail Sales figures, which came in well above market expectation. This is key as any figure release outside of the expected remit, is always likely to drive the market and increase volatility on exchange rates.
Finally, we had the Autumn budget and UK Chancellor Philip Hammond sent out mixed messages but with the initial focus on additional housing and digital infrastructure, the Pound continued its run, putting pressure on 1.70. This run came to an end at the back end of last week and retracted further today as investors started to focus on the negative aspects of last week’s budget, including a predicted 122bn debt in the period running until 2020.
This reaction has in turn boosted the AUD’s value and it is likely it will now find support under 1.70 on the exchange. The AUD has benefitted itself from an upturn in economic conditions in Australia and as such, the AUD has found sustainable market support against the Pound over recent months.
Personally, I would not risk gambling on the current market, with economic conditions in the UK on a knife edge and huge scope for AUD weakness when you consider the recent history on the pair.
Looking ahead and this week we have the Bank of England’s (BoE) Financial Stability Report on Wednesday, which will give us a key insight into the current health of the UK economy. Thursday we have UK PMI Manufacturing data, which came out below market expectation last month and overnight we then have the latest Australian Retail Sales figures, which will be monitored closley by investors.
If you have an upcoming GBP or AUD currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.
If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, 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 team for Matt. Alternatively, I can be emailed directly on [email protected]