Could we see further gains for Pound to Australian Dollar exchange rates?

The Pound has witnessed huge gains vs the Australian Dollar hitting a 3 year low at the end of October. Sterling has made gains since the US election as well as the High Court ruling concerning Article 50 earlier in the month. The Pound has made gains of over 6% during this period or the difference of £3,600 on a currency transfer of AUD$100,000. The Australian Dollar is heavily influenced by what happens with commodity prices and with Trump suggesting in his election campaign that he would charge 45% on Chinese goods and services imported into the US.

This is another reason why we have seen weakness for the AUD vs Sterling. Commodity prices have recently seen a fall in value and this has coincided with Australian Dollar weakness.

The housing sector has begun to shows signs of struggle and combined with weaker household incomes I think we’ll see further problems for the Australian Dollar in the longer term. Mining investment which has been a big driver for the Australian economy over the last few years has really dwindled. Construction figures down under showed a fall on Wednesday and this is further evidence that things are looked rather shaky for the Australian economy.

The current RBA governor Philip Lowe has been rather bullish since he came into the role a few months ago but if economic data continues to shows signs of a slowdown then I would not be surprised to see an interest rate cut early next year. Also, if the US Federal Reserve does look at raising interest rates in mid-December then I would expect the AUD to weaken as global investors will likely sell off the AUD in favour of the US potentially sending GBPAUD exchange rates in an upwards direction. If you’re looking to repatriate money from Australia then it may be worth considering getting some organised in order to avoid a potentially expensive end to the year.

For more information on how future data releases could affect your Australian Dollar exchange, call our trading floor on 01494 725 353 or email me here.

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