After crashing out of the World Cup the Australian Dollar has not been faring much better than its football team in recent weeks. As the ongoing trade wars continue between the US and China this is causing the Australian Dollar to weaken against a number of different currencies including the Pound. Tom Holian's Australian Dollar report below looks into how issues in China inevitably impact the Australian Dollar. The table below shows the range of GBP/AUD exchange rates during the past 30 days, demonstrating the amount of difference just a few days can make on a currency transfer.
|Currency Pair||% Change||Difference on £200,000|
GBPAUD exchange rates have been heading in the direction of 1.80 but appear to be hitting a level of resistance just below.
As the trade wars rumble on the problem is that as Australia is so closely linked to what happens in China then this will often result in weakness for the Australian Dollar and this is part of the reason for the recent performance of the currency.
Indeed, with the US Federal Reserve having raised interest rates twice already this year with two more expected by the end of the year. Indeed, during the last month the Australian Dollar has weakened by over 4% which is the difference of over AUD$14,000 on a currency transfer of £200,000 which highlights the importance of being kept up to date with your account manager.
Earlier this month the Reserve Bank of Australia kept interest rates on hold and whilst the uncertainty between the US and China continues I cannot see any rate hike coming anytime soon.
Whilst the uncertainty surrounding Brexit remains this is keeping the Pound from breaking much higher against the Australian Dollar. If you compare the Pound against a number of different currencies it appears as though the commodity based currencies are all weakening but the Pound remains in a tight range vs the US Dollar and Euro. Therefore, whilst the Trade Wars continue I think this could cause the AUD to weaken even if the EU Summit over the next few days causes some uncertainty for the Pound.
Overall, my prediction going into July is that we could see GBAPUD rates move as high as 1.83 providing the best opportunities to buy Australian Dollars since mid-April.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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