Sterling has started this week stronger with the AUDGBP currently at the 0.5524 level against the Aussie which is the first time in just over three weeks. Following some positive developments in Brexit talks last week the pound has been able to make small gains. Over the next few weeks if the Brexit talks continue on a positive trajectory then there is a chance that we could see further momentum for Sterling. At the start of April the AUDGBP rate was just below the 0.5 level so in the space of only three months we have seen it fall by just over 10%. In the coming months I wouldn’t be surprised to see Sterling start to make up some of the lost ground as the risks of a no deal Brexit decrease.
From the Australian perspective there is a real concern with the virus once again spreading around the country as the Melbourne area enters a stage 3 lockdown once again. This means you can only do essential travel and exercise within the lockdown area. Much of Australia had returned back to normal, a key indicator of this is the stadiums for sporting events with crowds in them but that could come to a halt. Like the majority of economies around the world the Australian debt level has reached a record high with the Government doing their upmost to protect as many jobs as possible.
Australia was one of the fastest countries to recover following the Coronavirus outbreak and did at one point get themselves down to no new cases internally. However as they allowed people from around the world to return home, they have had a influx of cases in the last few weeks. The lockdown like we have seen in Leicester in the UK is thought to be enough at this point but the next few weeks will tell. If there is a major outbreak that could have a impact on the Aussie and may be a accelerator for negative rate movements.
Big Week of Australian Data
This week will bring a whole raft of data for Australia starting with Consumer Confidence and New Home Sales on Wednesday. Consumer confidence is always key as it’s a indicator of what’s to come, if consumers don’t want to be out there shopping then the economy will struggle to rebound. Secondly new home sales could be positive as there will have been a lot of delayed sales over the last few months and people might be coming back to the market.
To finish the big week of data on Thursday the latest unemployment data will be released which is expected to be a cause for concern. Whilst a rise in unemployment is not going to come as a surprise to anyone the level of it may prove fateful for the Aussie. The data is split into full time and part time employment so it will be clear if there has been a effect on one type of employment and not the other.
The Australian Government are expecting a large jump in the unemployed rate but it may not take its full effect for a couple of months as businesses start to have to make tough decisions based on company performance. The other concern in Australia is the steady rise of inflation and the expectation of wage stagnation over the coming year. This is where despite growth in wages the costs of goods rise faster meaning you’re actually not getting real wage growth.
The interest rate in Australia currently sits at 0.1% which is record lows, over the past few years it has dropped all the way from 2.00% which was one of the best levels in the western world. Now that the level has dropped anyone with savings in a bank is no longer earning much interest. This is designed to encourage people to invest their money in other areas which can act as a stimulator for the economy.
If you’re looking at completing a currency transfer using Australian dollars then there is plenty to keep in mind in the short and medium term. In the immediate future the outcome of Brexit looks to be the biggest influencer and over the next few weeks I imagine we will start to see the effect on the AUDGBP currency pair. If you would like to discuss any plans you have in the near future then please don’t hesitate to get in touch at any point and I will be able to talk it through with you. You can contact me directly using the form below.