This Australian Dollar report will examine the factors that could affect exchange rates in the coming weeks to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received in AUD when buying £200,000 at the high compared to the low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
GBP/AUD rates remain marooned under 1.65, as the Brexit stranglehold continues to restrict any major advances for the Pound.
The AUD failed to make a significant move overnight, as the Reserve Bank of Australia (RBA) decided to keep interest rates on hold at 1.5%. This was the 13th month in a row that the central bank kept rates at its record low, citing inconsistencies in housing prices around Australia.
Despite the current negativity surrounding the UK economy, the Pound has managed to find support above 1.60. Its current market value is floating around 1.63 but any move above 1.65 is unlikely in my opinion, whilst market conditions remain as they are.
The Australian economy has moved forward in recent months and despite its heavy, sometimes unsettling reliance on China, there is no hiding from its growing prosperity.
Considering the current malaise and negative perception surrounding the UK economy, I would certainly not be gambling on any major spikes for the Pound. Instead I would look to protect any short to medium-term GBP/AUD positions whilst mid-market prices remain above 1.60, which could become a key threshold for the pair.
The issue many clients holding Sterling have is that they recall historical rates, when only 18 months ago the pair was trading above 2. However, conditions have shifted and Brexit fears have pushed the UK into unchartered territory, weighing our economy down and sapping confidence from every quarter.
Whilst no one can see into the future it is extremely unlikely that we will see rates even close to that for the foreseeable future and as such clients need to realign their potential goals in line with the current market conditions.
This does not mean that GBP/AUD rates will move one way indefinitely, so those willing to gamble on their positions need to look for short-term gains not long-term sustainable improvement.
The risk for those clients holding AUD is that any global unrest regarding key issues such as North Korea, or indeed Brexit fears mean that investors may pull funds away from riskier currencies such as the AUD and return them to safer havens such as the CHF or historically the USD.
This means that the AUD could be inadvertently weakened by any increase in the rhetoric surrounding the Korean Peninsula, so clients may wish to consider this ahead of any AUD currency exchanges this week.
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.