Strong employment figures saw AUD higher against the Pound late last week, and risk surrounding the conflicts in North Korea and Syria have also added to the Australian Dollar's rally.

Australian economy sees sharp month on month boost

The end of last week saw a strong and unexpected showing for the Australian economy, and therefore the Australian Dollar. The Australian economy added over 60,000 jobs in March, bringing up the participation level massively, and is a staunch improvement on the 2,800 added in February.

Most had seen the poor February total as an indication that the economy had become saturated from the traditional seasonal rally during the Australian summer. Instead this turn for the better showed the latent growth potential still there, and the Dollar rallied from this boost in confidence.

Why this rally for AUD is unlikely to last

The word of the moment right now is risk. The changed atmosphere fuelled by the escalating threat from North Korean nuclear threats and the flop-flopping Trump foreign policy towards Syria is affecting many global markets. Traditional safe-havens such as Gold are up, and riskier assets, such as commodity based currencies are coming under fire.

As the US Dollar section of my report discusses, these heightened tensions are unlikely to change soon, and these appear to be the driving factors as to why the Australian Dollar is still gradually losing value against the Pound.

Some further positive data on Monday morning still wasn’t enough to boost the Australian Dollar enough to drive it back below 1.65. The Chinese economy, to which our most regular readers will know the Australian counterpart is heavily tied to, posted improved growth levels up to 6.9%. Given that the UK’s growth is projected around 2%, and that Chinese growth had previously been visibly slowing, this stark acceleration in normal times would have put a dam to the Pound’s improved flow against the Aussie.

Instead this wasn’t enough to get investors out from behind their high walls. The Australian Dollar may simply have to weather the storm until higher confidence returns.

Therefore anyone with an Australian Dollar selling requirement and are waiting for improved rates are effectively gambling that current global tensions will be ending shortly, and with failed talks finishing just a few days ago, that seems unlikely.

Rates for selling Australian Dollars are overwhelmingly attractive in a historical perspective, and as such, particularly with the benefits of the tourist season on the Aussie winding down soon. It may be wise to look to securing an exchange rate against the Pound now to avoid seeing GBP/AUD creep back up. Call us on 01494 725 353 or email me to book a quote.

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