This year, lending standards in Australia have tightened which has put further strain on the housing market down under. Previously, banks failed to adequately check whether people’s incomes would be able to repay bank loans and now Australian banks are paying the price. You could argue that this is one of the key reasons the Reserve Bank of Australia have no interest in raising interest rates anytime soon.

Currency Pair% Change in 1 monthDifference on £200,000
GBPAUD4.26%$14,740

Going into the New Year, the Banking Royal Commission are set to release further guidance in Q1. House prices in major cities such as Perth have fallen by 15% in the last 4 years. If further tightening is on the horizon this could add pressure to an overinflated housing market. Recent reports by UBS are suggesting the housing bubble could burst if further tightening standards materialise, and house prices could fall by 30% in the major cities.

What next for GBPAUD exchange rates?

GBPAUD forecast for Q1 of 2019

With the RBA not looking to raise interest rates and the housing market a key concern for Australia, the Australian dollar could have a tough start to 2019. However the pound has problems of its own and I actually feel the question is which currency will weaken more than the other throughout Q1.

The ongoing Brexit saga will be the main talking point in the UK. If Theresa May fails to get her vote through the commons in January I expect she will lose her job which will send the pound tumbling, due to the uncertainty it would cause. If she manages to get the vote passed then you would expect the pound to strengthen considerably against the Australian dollar.

 

My personal opinion is that she has failed to achieve further concessions from the EU, so it’s unlikely that MPs are going to sign off her deal. Therefore, I expect GBPAUD exchange rates to be lower than they are now come the end of March 2019.

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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.