The Australian Dollar weakened to its lowest level against the Pound in over 2 years yesterday, falling to just above 1.87, providing clients with the best opportunity to buy Australian Dollars since before the UK Referendum in June 2016. The main reason is due to significant Sterling strength as the UK appears to be getting closer to a Brexit deal which could come as early as next week, as stated by Michel Barnier – EU Brexit negotiator.
|Currency Pair||% Change in 1 month||Difference on £200,000|
The ongoing trade war between the US and China is having a significant impact on the Australian Dollar, as China is Australia's largest trade partner. News yesterday that tensions are increasing has done little to help the Aussie. The US has warned of refusing Chinese foreign investment the rights to new technologies such as 5G wireless, and new warnings of an additional $267 billion of tariffs on China (on top of the $250 billion already imposed). This could have dire consequences on the Australian economy and therefore the Australian Dollar.
The International Monetary Fund (IMF) has also downgraded global growth forecasts, and has suggested that growth in Australia could fall to 3.2% this year and 2.8% next year. The Reserve Bank of Australia are already under pressure from keeping interest rates on hold at the current 1.5%, falling behind as other economies including the US who continue to raise interest rates, making them a more interesting prospect for investors. If this projected slowdown in growth becomes a reality, the Australian Dollar could continue along this negative trend for the foreseeable future.
I would expect Brexit to continue to be the main driver for GBP/AUD exchange rates, and if a deal is struck between the UK and the EU over the coming days, the Australian Dollar could weaken dramatically. If you have an upcoming transfer involving the Australian Dollar, our team of traders could help you to trade at the best possible time, and putting a plan in place now could save you thousands. Get in touch today to help you to put a plan in place.