AUD Boosted on Higher Commodity Prices (James Lovick)

Australian Dollar Forecast: Why is the AUDGBP Rate Falling?

The Australian dollar has had a good run this week having made some inroads against most of the major currencies. The support has largely come from a rise in commodity prices namely iron ore and oil. The Australian dollar which is classified as a commodity currency generally perform well when commodity prices are rising.

A key interest rate decision from the Reserve bank of Australia (RBA) next week is likely to contribute to the direction of travel for the Aussie dollar. The RBA have held interest rates at the record low of 1.5% since last August and there isn’t much sign of that changing now. Recent concerns surrounding consumer debt and also consumers who have overborrowed for property purchases are helping shape monetary policy within the central bank. It is unlikely the RBA will want to cut in fear that it will exacerbate the problem of asset bubbles. As such there is likely to be no change at the next meeting and this could see the dollar strengthen that little bit further. Clients looking to sell Australian dollars could see a small window of opportunity after the next meeting if the rhetoric remain the same.

GBP AUD

GBP AUD should see a volatile end to the week as a result of political developments in the UK. An agreement between the conservative government and the Democratic Unionist Party (DUP) has now been made as of yesterday afternoon although the market reaction has so far been very limited.

Thursday sees the House of Commons vote on the Queens speech and this is where things could become more interesting. The vote should go through without a hitch in which case the pound is likely to rally. However Labour leader Jeremy Corbyn has said that he will try and vote down the Queens speech which cause fireworks on the currency markets if he was able to do so in this unlikely scenario.

A minority conservative government in power could help see GBP AUD break back over 1.70 in the short term. Clients looking to sell Australian dollars for pounds may wish to consider moving sooner rather than later as the political impact should not be underestimated.

If you would like further information on Australian dollar exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk