This update examines factors that could affect a currency purchase this week. In the table below you will see the change from high and low for GBP/AUD for the last 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/AUD3.21%AUD $10,980

Problems for the Australian dollar and sterling

Since mid-March the Australian dollar has been losing value against sterling and exchange rates have increased from the high 1.50s to the low 1.70s. To put this into monetary terms this shift means a 200,000 Australian dollar purchase is now £10,000 cheaper.

One of the main reasons to why the Australian dollar has been devaluing is because of the falling iron ore prices. Since February iron ore has dropped from $95 dollars per tonne to $60 dollars. Last week Fortescue which is one of the largest producers of iron ore have issued a warning as they believe iron ore prices will continue to fall in the upcoming weeks.

The reason why iron ore prices are falling is because of China’s slowdown. It was only last week well established Moody's’ downgraded China’s credit rating to A1. The reason why they downgraded China is because China are reliant on stimulus in order to keep the Chinese economy ticking over. Therefore debt levels will continue to rise but I can’t see demand for iron rising anytime soon. However last week’s negative news surrounding the pound (see sterling section of this report) has put a halt to the momentum.

What to expect for GBPAUD clients for the upcoming months

Looking ahead short term, I believe the pound and the Australian dollar will remain under pressure so the question clients need to ask themselves is which currency will devalue more than the other. I personally believe the conservative party will pull through and win a majority therefore we could see the pound start to make inroads against the Australian dollar once more. Couple this with the problem facing China I wouldn’t be surprised to see exchange rates shift to the higher 1.70s or even break through 1.80. However clients need to take into consideration at any point Brexit negotiations could come to a halt which could have a seriously negative impact on the Pound.

For further information on your currency transfer and how it could be affected by future date releases, feel free to call our trading floor on 01494 725 353 or email me here.

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.

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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.