GBP/AUD rates are once again trading under 1.70, as the Pound’s struggles continue following last week’s unexpected election results.
The Pound has seen its gains over the past month dissipate, with 1.70 becoming a key threshold for the pair.
Those clients holding both Sterling and AUD will now be asking themselves how the pair will react over the coming days? Whilst I don’t anticipate a major advancement for the Pound whilst so much uncertainty hangs over the UK economy, any deal between the Conservatives and the little know DUP party from Northern Ireland, could bring an element of stability back to the market.
Political or economic uncertainty is generally a currencies undoing and the Pound’s struggles over recent days is proof of this. Once a government has been formed, then it is far more likely that investor confidence will rise and the Pound could stabilise as a result. This could have an instant negative impact on the AUD and as such the current sell prices for those clients holding AUD look very attractive indeed.
Whilst the AUD has also been supported due to the Chinese economy stabilising and accelerated growth in its own economy, it is always left somewhat vulnerable due its status as a commodity based currency.
For example, the Trump effect is causing investors to panic and this is unlikely to benefit riskier commodity based currencies such as the AUD in the long-term. The AUD’s value is inextricably linked to Australia’s booming export market and any downturn here will likely knock its value. Due its reliance on global growth a change in fortune for China, or concerns regarding the US can cause investors to sell off their riskier assets (such as the AUD) and move funds into ‘safe haven’ currencies such as the CHF.
Ultimately, this means that investors will look to GBP/AUD for example and see the opportunity to make more money on bigger market swings and thus, the pairs value can fluctuate quite substantially.
The current market is extremely unpredictable and with global growth fragile and concerns over the UK economy ahead of what is likely to be arduous Brexit negotiations, I would be tempted to look for short-term market opportunities.
If you have an upcoming GBP or AUD currency transfer to make and would like to be kept up to date with all the latest market movements, 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].