Tuesday 7th July 2015
In recent posts I’ve been focusing on Sterling/Euro exchange rates and the Greek crisis that is the reason for the current buying levels for the Euro being around the best in 8 years. Nothing has really changed for GBP/EUR and while a deal is yet to be made, the rate remains supported around the €1.41 level.
For something a little different, in today’s report I’m going to take a look at Sterling/US Dollar, Sterling/Australian Dollar, and also some of the other commodity based currencies, including the forecast for where analysts think rates could go. Many readers are unaware that this site not only provides a market commentary on Euros, but also most major international currency pairs. (If there is a particular currency pair that you would like to chat about, then get in touch for a free consultation.)
In addition to the market reports I provide for free, I can also provide you a quote on your currency exchange. I can access commercial rates of exchange for over 30 currency pairs that are up to 5% better than you can achieve at the bank. If you have a currency exchange to perform this year, then click here to find out what rates I can offer you.
GBP/USD was down in the $1.40’s a few months ago, however recently it had been climbing. In the last 3 months the rate climbed over 10 cents higher, as you can see from the chart below:
In the Spring, markets expected the USA to raise interest rates at some point this year. This along with strong US economic data strengthened the US Dollar and made it more expensive to buy. However in the last few month’s economic data was coming in worse than expected. Also, the expectation of an interest rate rise has now been pushed back, and this is what caused the USD to weaken and exchange rates to rise.
Today however, we have seen the rate slide from $1.5625 to $1.5425. This is because interest rate differentials are starting to move in the Dollars favour. Also, while the crisis in Greece deepens, the US Dollar is seen as a ‘safe haven’ for investors in times of uncertainty. In my view I think this slide will continue, and we may well see rates down at or below the $1.50 mark again by the end of this year.
GBP/AUD, and GBP/NZD, GBP/CAD, GBP/ZAR
Sterling/Australian Dollar rates are currently around their best in 6 years. Part of this is due to a robust UK economy, but mostly this is due to weakness in the Australian Dollar.
The Aussie Dollar is a commodity based currency, which is a name given to currencies of countries which depend heavily on the export of certain raw materials for income*. Australia is just such a country as a large part of its economy relies on exports of raw materials to China. China’s economy has been slowing down recently, and their stock market is falling.
This has resulted in less demand for these raw materials, and commodity prices are low anyway due to the Greek crisis. The result is a weak Aussie Dollar, and at the moment £1.00 will buy you $2.08 AUD, which is around a 6 year high. To be honest, while commodity prices continue to suffer, we could see all commodity based currencies like the AUD, CAD, NZD, NOK and ZAR continue to weaken and exchange rates may rise further for those buying these currencies with Sterling.
*Other Commodity based currencies are the Canadian Dollar, New Zealand Dollar, Norwegian Kroner, South African Rand. All of these currencies are currently weak and very cheap to buy due to low commodity prices.