AUD Forecast – Sterling Spikes Ahead of BoE Interest Rate Decision (Matthew Vassallo)

AUD GBP Lower Ahead of PMI Data for the UK Economy

GBP/AUD moved back through 1.72, with the Pound finding support ahead of Thursday’s Bank of England (BoE) interest rate decision.

Many clients will now be questioning their next move but personally it may be wise to consider any upcoming Sterling exchange ahead of Thursday’s decision.

I believe a small rise in interest rates (up to 0.25%) has already been factored into GBP/AUD current value and whilst you may see a small upturn should the aforementioned hike occur, it is unlikely to be overly aggressive.

I feel that whilst market perception around the UK economy remains minimal, any rises in the Pound’s value, however marginal, should be considered a positive and clients holding Sterling need to consider their position accordingly.

Looking at the Australian economy and a report yesterday made for interesting reading. It is now over 25 years since they faced a recession, the longest run in any developed nation.

Whilst many others have faltered, Australia seems to have weathered the storm but could things be about to change?

The UK economy as we well know is facing a long road to recovery, as we try to navigate our separation from our EU neighbours and despite some support for the Pound of late, the UK is without doubt fighting an uphill struggle as it tries to adapt to its new surroundings.

The Pound has lost value against the AUD for much of this year, with GBP/AUD rates hitting 1.64 only a few months ago, before its upturn back to the current levels.

The Australian economy on the other hand has continued to perform relatively well but those clients holding AUD need to remain cautious, as a senior economist admitted in the report, they “have been riding their luck to some extent”.

Australia’s economic prosperity is for the most part driven by the export of their vast supply of raw materials. This is mainly iron ore and liquified gasses, which are then shipped to China their main trading partners.

They have also benefited from a booming property industry, driven by low interest and easy credit. A high influx of immigration has also helped to drive their economy forward, whilst others have faltered and this has all combined to help support headline growth.

However, looking more closely and these factors have helped mask other economic short-comings, in particular a flagging Manufacturing & Production industry. This was once the envy of other nations but aging, high-cost infrastructure has slowed these sectors dramatically.

If these economic problems were to manifest themselves, then the current value against Sterling could look extremely attractive in the future and as many are predicting, the bubble must burst at some point.

Brexit negotiations remain stagnated and this is helping to inadvertently boost the AUD’s value but were they to take an upward trajectory, the Pound could fine support and a move back towards 1.75 is certainly not out of the question.

If you have an upcoming GBP or AUD currency transfer to make you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over eighteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award inning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on [email protected] to find out all the options available to you ahead of your currency transfer.