GBP/AUD forecast – highest in nearly 3 years

GBPAUD Forecast

In this morning’s post we’ll take a look at the GBP/AUD forecast as this currency pair has risen significantly recently. After the UK referendum, as I’m sure all readers are aware, the Pound fell in value significantly. This cause the GBP/AUD rate to fall from $2.00 to the Pound to as low as $1.60. However throughout the course of the last few years, the rate has been recovering most of these losses.

Why has the GBP/AUD rate been rising recently?

The most recent gains are due to Sterling gaining ground as speculation mounts that progress could be made with Brexit negotiations. This has helped the Pound become one of the strongest performing currencies of 2019 so far, although most will agree Sterling had a low starting point!

The link between Australia and China

The other reason for the GBP/AUD rate recovering is the way Australia’s economy is so reliant on China. Australia’s main export is Iron Ore, the majority of which is exported to China to fuel their building boom. Thus, their economies are inexorably linked. The Chinese economy has been slowing of late, recently lowering it’s economic growth targets, which have been impacted by the trade tensions between China and the USA, the worlds largest economy. Their growth is still very impressive – 6% last year – which is much higher than western economies, and double what the IMF expect global growth to be this year. However a drop in consumption is slowing things, and this has reduced demand for Australia’s Iron Ore.

Could the Aussie weaken further?

This means that the Reserve Bank of Australia could well choose to cut interest rates later this year, which has weakened the Aussie Dollar which has become cheaper to purchase. As you can see from the chart below, GBP/AUD has risen by almost 8% in the last 3 months, reaching a high this morning of $1.8700.

GBP/AUD rates since December 2018

Will GBP/AUD go up or down in 2019?

If May can get a Brexit deal agreed, then the Pound is likely to strengthen further. If Australia does cut interest rates, then this could mean a further gain for GBP/AUD rates. However given the rise in recent months, those clients that need to convert funds to AUD and don’t want to miss out on the best rates in nearly 3 years may wish to fix a rate now. If you have time on your side and want to see if rates rise further, then consider a ‘Stop Loss’ order to protect you against rates coming back down in the event of a ‘No Deal’ Brexit.

Those selling Australian Dollars to another currency will have been watching the rate move against them in dismay. AUD sellers therefore may wish to cut their losses and move out of the Aussie Dollar to protect against a further weakening of the currency.

Looking for the best GBP/AUD or AUD/GBP rates?

If you need to buy or sell Australian Dollars and want the best possible rate of exchange, then get in touch with us today for a free consultation. We can run over your options and provide you with a quote so you can see how much you can save.