Since the middle of March the AUDGBP exchange rate has been making consistent gains. In a 10 week period exchange rates have increased by 10 cents, great news for any client selling Australian dollars to buy sterling. You can argue that COVID-19 has been a major contributing factor as the infection and death rate is much lower down under, which has helped Australians go about their every day lives in a much easier way than in the UK, even though large parts of Australia are in some form of lockdown.
Also, the Australian dollar is a risk-based currency. In recent weeks, the global economy has started its recovery with many countries easing their lockdowns which has provided strength for the Australian dollar. In addition Australia largest trading partner China appears to be back on it’s feet which is also good news for the Australian dollar. However in recent weeks reports are suggesting that the amount of coal being exported to China from Australia maybe limited which may cause problems for the Aussie moving forward as coal is one of Australia major exports.
Factors Impacting AUDGBP Exchange Rates This Month
It’s an important month for the UK in regards to Brexit. UK and EU negotiators have continued debating and will continue to debate this week. In recent weeks, the tone has been fairly negative from the EU as Michel Barnier has explained that the UK continue to take steps back from the original commitments. Fishing has been a major stumbling block and I would expect we may hear more at the end of the week in regards to this problem.
In the middle of the month, the EU summit will take place. At the EU summit, EU leaders will discuss things such as COVID-19 and the economic impact it is having across the globe and many other pressing issues however a key topic will be Brexit. At the end of the month, this is the deadline for the UK to ask the EU for a Brexit extension. In recent years, the closer the UK has got to crashing out of the EU without a deal the pound has fallen in value. If its gets to the end of the month and there has been no break through regarding Brexit and the UK hasn’t asked for an extension I think this could have a negative impact on the pound’s value.
COVID-19 to Continue Taking Centre Stage
The pound had a good run yesterday, following the Governments easing of the lockdown. More people should be returning to work as some children can now go back to school, however most media stations are reporting that the take up is varied across the UK. Throughout the month, the quicker Australia or the UK can get back to more people in work the better for that country and therefore the economy. However, a major concern in the UK is the infection rate climbing once more. If a country has to go back into full lock down it could have a major impact on the currency. At this stage I think its fair to say that the UK are more likely to have a 2nd wave than Australia.
Key Data Releases to Look Out For This Week
Tomorrow morning Australia release their latest growth numbers and at the same time building permits. As you would expect GBP is expected to show a decline due to parts of the economy being closed down. However, it will be interesting to see how the building permits for April numbers materialse. Building permits is a great barometer of future growth. Later in the day the UK release tgeir latest market services Purchasing Manager’s Index (PMI) data. A major contraction is expected with the number set to be released at 28.
Thursday morning trade numbers are to be released for Australia. Forecasted numbers are suggesting exports appear to be doing better than imports. Later in the day consumer confidence is to be released for the UK. With most of the UK still shut down in one way or another, I expect these numbers could be a strain on the pound.
If you are buying or selling Australian dollars in the upcoming weeks with sterling or another currency feel free to get in contact for a chat about your own specific circumstances. I can provide you with a specific forecast for your currency pair and at the same time give you our live exchange rate for that currency pair so you can compare against your current provider or bank. Get in touch using the for below.