The Australian currency is at the mercy of many global factors currently which are shaping investor sentiment. Labelled a ‘commodity currency’ the Aussie will rise and fall according to investor’s views on global trade, in particular China. The currency was sold off entering 2019 on poor Chinese Manufacturing data, only for it to regain composure following some very good American data last week.

Currency Pair% Change in 1 monthDifference on £200,000

America is China’s largest export market, accounting for 19% of their exports. The good news for the American economy is good news for China and also the Australian dollar.

The Trade Wars are still perhaps the biggest driver and threat on the currency markets affecting the Australian dollar. Despite the good US jobs data cooling some of the more immediate fears as we enter 2019, the potential for issues down the line to weaken the Aussie is very high.

Australia’s top export markets are China, Japan and South Korea. These are all countries linked to Chinese economic dominance in the Asian region, and with China most at risk from the Trade Wars, the Australian economy and currency is at risk.

When should I sell Australian dollars for pounds?

The next week is looking like a very opportune moment to line up a transaction from Australian dollars to pounds. Mrs May’s Brexit deal is being revisited in the UK Parliament and many suspect it will fail. The potentially negative effects from the increased political uncertainty are high, and could easily see the pound lower. However, nothing is ever completely guaranteed on the currency markets and there are many cases to say the weakness for the pound is now largely priced in. Despite this I feel next week is a good time to be considering such a transaction, clients buying Australian dollars with pounds might wish to be acting in a more defensive manner to avoid holding a weaker pound.

There are no easy predictions in this market so to ensure you are making the most of these uncertain times, please contact our trading team to discuss your currency requirements.

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