Over the last week the Australian dollar has made a 7 cent again against Sterling, seeing the rate move from yearly highs of 2.06 back down to the current 1.99 level. Whilst Sterling has been doing well against other currencies the Aussie has been able to find some significant support.
The obvious reason for this development is China returning back to normality, especially in Wuhan where they have been on a 76 day lockdown. Whilst China’s figures surrounding Coronavirus may leave some scratching their heads, investors are hoping this return to business as usual for China could help the Australian dollar. China is Australia’s main trading partner which means any significant events taking place in China has a major effect on the Australian economy.
Whilst Australia may take a bit of time to fully come back on line the fact China will have a huge stockpile of goods to send and will want Australia’s exports means the Aussie economy could see a boost in the third quarter this year. If anyone is looking to purchase Australian dollars then they will know that the 2.0 level on the GBPAUD is a good level for the past few years. The rate has been in the low 1.60’s following Brexit so you’re 20% better of than the rate at that point.
Hanging on for the currency markets to improve can always be a risk and with so many things that can change the landscape a lot can happen. What will be very interesting is the potential impact on the reliance on China, and how trading relationships with them could change as we move forward, it is clearer than ever that the whole world has a over dependency on a single nation.
These sorts of changes could start to re-balance currency markets and change the way that investors use their money in the long term as well as the immediate economic implications we are witnessing. If you have a currency requirement in the future and would like to know more about the factors likely to impact it, get in touch using the form below. I would be more than happy to explain how we could assist with your plans moving forwards.