GBP/AUD Forecast – Political Fears and Uncertain Economies (Matthew Vassallo)

AUD GBP Lower Ahead of PMI Data for the UK Economy

GBP/AUD rates have been floating around 1.70 for some time now, with the Pound struggling to make any significant impact above this threshold.

Sterling’s resent woes have been well documented, with political infighting dividing the ruling Conservative party and a seemingly clueless Brexit strategy increasing pressure on the UK economy.

Whilst UK PM Theresa May struggles against a growing tide of public negativity, any improvement in market perception and ultimately investor confidence, is likely to hinge on a breakthrough in Brexit negotiations.

However, those clients holding AUD need to remain cautious due to a worrying undertone in the Australian economy. Despite the country not entering into a recession in over 26 years, this figure flatters to deceive somewhat.

Reports this week have suggested that the Australian economy is still far too reliant on “houses & holes”.

This references their typical business cycle, where economic prosperity is 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. At other times low interest rates and easy credit can boost house prices and when you combine this with the highest population growth in the developed world, it can help to prop up headline growth.

This in turn can mask other economic short-comings, in particular a flagging Manufacturing industry. This was once the envy of other nations but aging, high-cost infrastructure has slowed this sector dramatically.

If these economic problems were to manifest themselves, then the current value against Sterling could look extremely attractive in months, or even years to come.

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 above 1.70.

If you have an upcoming Sterling or AUD currency exchange to make, then we can help guide you through this turbulent market

Our award-winning exchange rates and 18 years of experience, has helped our clients achieve the most from their currency exchange, regardless of the market conditions.

If you would like a live quote on any exchange, or simply wish to be kept up to date ahead of any currency transfer then feel free to call me on 0044 1494 787 478 and ask one of the team for Matt.

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