This report will discusses the factors that could affect AUD exchange rates in the medium term this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference in Australian Dollars you would have received when buying £200,000 at the high compared to the low yesterday.
|Currency Pair||% Change||Difference on £200,000|
The Aussie Dollar is another currency that has seen a rocky start to the New Year although it continues to find support on the view that the Reserve Bank of Australia (RBA) will now follow in the footsteps of other global central banks and finally raise interest rates later this year.
The RBA should trail the likes of the US, Canada and the UK which all saw rate hikes in 2018. The markets are beginning to price in the prospect of a first interest rate increase in June 2018 which should help boost the Australian Dollar in the coming months. Now that interest rate expectations down under are beginning to change then this in my view could make the target of 1.80 for GBP AUD very difficult to reach.
A target of 1.77 for those clients looking to buy Australian Dollars with Pounds may be a more realistic level to aim for although even that will require some good news for the pound.
Clients looking to buy Australian Dollars with Pounds and looking for a spike should pay close attention to what happens in the ongoing Brexit negotiations. As the discussions move on to the transitional arrangements as well as the crucial future trade negotiation the pound is likely to see considerable volatility against the Dollar.
For the moment the outlook is slightly brighter with a bespoke UK EU deal expected which has helped see a rally in GBP AUD back to 1.75. However any hawkish commentary from the RBA is likely to reverse these gains. The RBA next meet Tuesday 6th February and any change in stance especially with developments in the US could see the Dollar move. As central banks navigate their own monetary policy dependent upon the economic data then the Aussie could be set for a volatile year.
The rest of the week is quiet for Australian economic data ahead of the Australia Day public holiday on Friday. Next week’s inflation data though could see more change for the Aussie.
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