Inflation a worry for Sterling (Daniel Johnson)

Could this Key Week for Brexit Negotiations Impact AUDGBP?

Snap Election causes pound strength

We have seen Sterling make considerable gains against the Australian Dollar of late. One of the main catalysts was Theresa May’s announcement that an election is to be held on 8th June. Historically a snap election has weakened the currency in  question, however on this occasion the opposite occurred. It was a shrewd move from the PM to call for an election while the opposition is so weak. The conservatives are some distance in front in the polls and are highly likely to win the election. A conservative victory is considered to be the safe bet for the UK economy, this caused a boost in investor confidence and in turn the pound. The market moves on rumour as well as fact and I am of the opinion a conservative victory is already factored into current GBP/AUD levels.

Iron Ore price causes Australian Dollar to fall in value

Another cause for the fall in Australian Dollar value is the drop in price of Iron ore. Iron ore is Australia’s largest raw material export. The price in iron ore has fallen considerably and is having a significant effect on the value of the Australian Dollar. Australia are heavily dependent on the Chinese and Chinese growth is dwindling, which is hurting the Aussie. Keep a close eye on Iron ore prices if you have a requirement involving the Australian Dollar as this could have significant bearing on your return.

Inflation a big concern for the pound

Yesterday, we saw inflation data released in the UK. There has been a rise in inflation, usually this would be deemed as positive for the economy but in this instance it is worrying. The rise in inflation is caused by the weak value of the pound. Retailers are paying more for their imported products and are now shifting the increase in price on to consumers. Wage growth is not keeping up with inflation so this could warrant consumers to stop spending. I stated this could be a problem in blogs months earlier, keep an eye on inflation levels moving forward as this could be a major stumbling block for the pound.

If you have a currency transfer to carry out in the coming days, weeks or months then you are welcome to speak to me directly. I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you  come to buy your currency. A minor improvement in a rate of exchange can make a considerable difference so for the sake of taking two minutes to email me you may save yourself hundreds if not thousands of Pounds. I can be contacted at dcj@currencies.co.uk. Thank you for reading.