Over the last 4 weeks the Australian dollar has been making gains against sterling which is fantastic news for any client that is holding onto Australian dollars and purchasing sterling. A month ago GBPAUD reached the late 1.70s off the back of the positive news that trade negotiations can begin between the UK and EU.
However in recent weeks the Reserve Bank of Australia have announced that an interest rate hike could actually occur sooner rather than later which is a big surprise as it was only a month ago the RBA warned that an interest rate hike was unlikely to occur throughout 2018.
Many of the leading banks throughout Australia are mixed to whether a hike is likely and therefore the future trends for the Australian dollar exchange rates. For example Commonwealth Bank and UBS are optimistic however Morgan Stanley and Westpac are talking it down. Personally I believe the RBA wont want to be left to far behind the US and they may follow to suit when the US hike, therefore I would keep an eye on US interest rate decisions.
Commodity prices will also be the key driver this year for the Australian dollar which is no surprise. Again Commonwealth Bank and UBS are optimistic that Iron Ore will continue to increase where as Morgan Stanley and Westpac believe a major slowdown is on the horizon for China, which will therefore mean demand for iron ore will drop, consequently having a detrimental impact on the Australian economy and dollar. Its very difficult to predict however with growth forecasts for China suggesting a slowdown is on the horizon, I tend to lead towards Morgan Stanley and Westpac’s predictions.
If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company [email protected].