Will Pound to Australian Dollar exchange rates fall further?

The Australian Dollar is at close to its strongest since October which was a 4 year high for the currency against Sterling. Overnight data from China showing Chinese imports increased 3.1% versus the 2.7% expected has further helped the currency to gain on sterling. With sterling likely to remain in the doldrums as Brexit negotiations stagger along I would be treading very carefully if I was holding Sterling and looking to buy the Australian Dollar.

The main news to hang on for if you are looking for improvements is to await the UK’s Supreme Court case decision due any day now. This is predicted to lead to GBP strength if as predicted the case supports the view the UK government must seek parliamentary approval to trigger Article 50, the legal mechanism for the UK to leave the EU.

There are no guarantees and many clients have been stung this week by the unexpected turn of events as Theresa May the British PM hinted further at a ‘hard’ Brexit. There isn’t a huge amount of Australian domestic data around, next Thursday is the latest Australian Unemployment data expected to support a stable picture around 5.7%.

Will interest rates rise in Australia?

It seems UK based events will dominate GBP/AUD movements in the short term. Longer term there is an increasingly likelihood that Australia will be looking to raise interest rates, a prospect that will only further help the Australian dollar to remain firm against the Pound. This is partly down to the US raising their interest rates as overseas markets put borrowing up, it puts up the borrowing for Australian banks. With Australian interest rates at 1.5% they remain an attractive proposition against many currencies which have near zero or even negative interest rates.

Assuming we have no unexpected shocks on the markets and with the Supreme Court case out of the way I expect GBP/AUD to continue to fall as Sterling struggles and the Australian Dollar becomes more attractive. Clients looking to buy Australian Dollars in the short term should be eagerly checking the results of Supreme Court case for a potential get out of jail free card. Otherwise it appears to me this market and potentially much of 2017 will continue to favour Australian Dollar sellers.

Do you have an Australian Dollar buying or selling requirement but are not sure as to when the best time to make a transfer could be? Why not speak to our friendly team on 01494 725 353. They may be able to help you make an informed decision.


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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.