The pound spiked impressively against the Australian dollar yesterday as the Bank of England indicated the possibility of higher interest rates to help maintain Inflation. The Australian dollar was actually weaker too on the back of Unemployment data which reflected a much weaker Unemployment picture than previously thought. If you are looking to make a transfer in the coming months and weeks than understanding just where the Australian economy and the UK’s Brexit negotiations are headed is key.
The Australian economy has been buoyed by rising commodity prices and continued solid Chinese economic growth and investment. The higher interest rates in Australia also offer investors are solid platform to invest in presenting much greater returns than the in some case negative offerings from elsewhere. Whilst the United States raising their interest rate this week did help the Australian dollar a little more, the Aussie lost ground to rise back above 1.60 on GBPAUD.
I personally think the rate will struggle to maintain itself above 1.60 as the pending UK Brexit negotiations and fears are likely to unsettle the pound. Most commentators believe the triggering of the Article 50 clause will see the pound weaken but I believe we might see some small improvements in the value of sterling here, although ultimately they will prove shortlived.
If you have a transfer to make buying or selling Australian dollars we are a very important time. With rates hovering around 1.60 the prospect of events getting even worse for Australian dollar buyers is highly likely. Clients buying Australian dollars hoping that this is a ‘bottom’ in the recent trends could be in for a nasty shock if we hit 1.55 or worse in the coming weeks.
Many clients said it was painful to buy at 1.80 and even 1.90 last year failing to believe us when we said it would get worse. Some clients also failed to believe us when we had rates above 1.70 and we predicted it would get worse. The global conditions that contributed to the GBPAUD rates sliding to some of the lower levels in the last few years remain and I think Australian dollar buyers need to be very careful about having expectations that are too high.
To discuss the currency markets and all of your options with a currency specialist with almost ten years experience handling the personal and business requirements of thousands of clients in Australia and the UK, pease contact me Jonathan Watson on [email protected] or call 01494 787 478 in UK business hours.