Currency Forecasts

Australian Dollar currency forecast 2019

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In this post I will take a look at the recent trends for the pound against the Australian Dollar and look at what could impact the short term trends for the pound against the dollar.

As with many currencies the Australian Dollar has seen some significant sings in recent weeks having traded within a high /low range of of 1.8445 to 1.7299 a spread of 6.2% in just over three weeks. This is a pretty significant and I will explore below as to why this has happened and my thoughts on the future trends.

Why has the Australian Dollar weakened?

On the 12th December the GBP/AUD exchange rate was sitting at 1.7299 and by early January the Australian Dollar had devalued to fall below 1.80. There are a number of factors as to why I believe this has happened and as to why it has fallen. Firstly on going trade tensions between the US and China and the potential restrictions being imposed as caused a fall in economic growth in China.

With Australia being the largest net exporter of raw materials to China, a fall in economic growth would tend to mean a fall in demand for these raw materials and hence a fall in export demand of these good. The net gain of this is a fall in value for the Australian Dollar. This has be felt against a host of currencies inclusive of the Euro.

We have also seen a mix of poor data sets from Australia in recent weeks, and these, combined with limited expectations of any short term interest rate hikes from the Reserve Bank of Australia has keep the Aussie on the back foot.

Where now for pound against the Australian Dollar?

We have recently seen the Australian Dollar gain back nearly 2% against the pound and I believe those looking at buying the dollar may have missed the highs. It would appear demand for the risk-correlated Australian Dollar was supported by market optimism that US-China trade negotiations were progressing, and were little affected by yesterday’s mixed Australian trade results. Australian Dollar investors will be reacting to today’s Australian building permits report, and the Federal Reserve’s latest meeting minutes results this evening may also have an impact on risk-sentiment. It is unlikely the Fed will look to raise interest rates in the coming months and this may cause a sell off for the US dollar and a drive to riskier assets like the Australian Dollar. I would look for the pound to trade at 1.75 in the short term.

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Article 50 to be delayed?

The Pound remains relatively stable against most major currencies despite the on-going Brexit uncertainty. This week parliament continues to debate the withdrawal agreement, with the ‘meaningful vote’ due to take place next Tuesday. However there is every chance that this vote will be delayed again for the second time.

There has also been news this morning that the EU and UK are exploring the option of extending the Article 50 period, to give all parties more time to thrash out a deal that can get through parliament.

What effect would extending Article 50 have on Sterling?

It’s very hard to know. On the one hand, you could say that this gives more time to get a deal everyone is happy with, and the Pound could rise. However all it’s really doing is kicking the can down the road again. If it looks like next weeks vote will lose by more than 50 votes, then I think Theresa May will delay it again. Currently the PM is trying to seek further concessions from the EU, in order to try and get the deal through.

The currency markets are seemingly not taking a huge amount of notice as nothing has really changed. GBP/EUR rates remain in the €1.11’s where they have been for a while. Until we get more concrete news on what is likely to happen, investors seem to be sitting on their hands. I think most of the bad news is already priced in to the value of the Pound, and that’s why we haven’t seen much movement for Sterling.

What else is affecting exchange rates?

Away from Brexit, we’ve seen slow car sales in the UK, but the news didn’t have much effect on the Pound. in the Eurozone, we’ve seen some better then expected retail sales, and later on this morning we’ll see the latest EU business climate figure. it’s expected to drop from 1.09 to 0.99, and if this is confirmed it’s likely to weaken the Euro slightly that could help GBP/EUR rise.

Elsewhere we have US trade balance figures and trade data from Canada.

To discuss what’s happening with exchange rates or get a quote to see what rate we can offer you, make a free enquiry today.

Pound/Sterling exchange rates. Weekly forecasts

Following the Christmas and New Year break we head into the first full working week of 2019 with plenty in store for the pound. Of course the most significant date in the diary will be the 21st January, the date that Prime Minister Theresa May will take her Brexit bill to parliament. There are a number of scenarios and outcomes for sterling exchange rates, these were explored by my colleague Alastair in his post last year

One thing that can be certain is there is likely to be some significant market volatility in the coming weeks and for this reason it would be well, should you have a pending transfer to arrange, to get yourself in position to act on the market movement.

Looking shorter time I have outlined the key areas to focus on this week:

Monday 7th – little or no data of note from the UK but look out for European Retail sales figures at 10:00. Figures from Germany this morning were much stronger than forecast and should the data at 10:00 follow suit then the Euro could gain some traction.

Tuesday 8th – again no data of note from the UK but there is a plethora of European data starting with industrial and consumer confidence at 10:00. For the afternoon session look out for US trade balance data at 13:30.

Wednesday 9th – today will be dominated by US data with a number of speeches from key Fed members followed by the Fed minutes at 19:00. In these minutes it will give clues as to what future monetary policy the Fed has in store and this could cause USD fluctuations accordingly. From the UK there will be a speech from Bank of England Governor Mark Carney.

Thursday 10th – today is relatively quiet across the board but look out for US initial jobless claims data at 13:30. Again there will be a number of speeches from key Fed members throughout the afternoon, these will be digesting the outcome of the minutes from the night before.

Friday 11th – today is by far the busiest day from the pounds point of view with a number of key UK data releases at 09:30. To start we have industrial and manufacturing data, both expected to show slight improvements from the previous month which may lend support to the pound. We also have UK GDP data, figures forecast at 0.1% and any improvement on this and once again sterling could have a good morning.

Looking for the best exchange rates

We offer exceptional rates of exchange coupled with tools to enable you to avoid sharp price changes. Even if you are already using a currency broker, it’s likely we can get you a better rate. To find out more about how we can help, or to get a quick comparison quote, complete our free enquiry form here.

Sterling has a shaky start to 2019

Good morning and a very Happy New Year to our readers. As we enter the first few days of 2019, the Pound has had a shaky start to the year. Over the Christmas period the currency markets were quiet with the GBP/EUR rate remaining around the €1.11 mark. However overnight figures from the BCC were releases show that UK services fall to the lowest in a few years at the end of last year. This has caused the Pound to fall by a cent overnight.

What is causing the Pound to drop?

It was expected that high street retailers and shops will have struggled over the Christmas period, so this wasn’t a surprise, but when you couple the latest Services figures it shows fresh signs of the economy slowing as we approach a key time in the UK/EU Brexit negotiations.

Business confidence and consumer confidence is low and this is reflected in the UK currency. Against the Euro, the Pound fell 1 cent overnight, touching €1.10 before recovering slightly to around €1.1038 at the time of writing.

The low jobless levels are also having the unexpected effect of companies struggling to hire staff. Exports are up however due to the weak Pound, and manufacturing is doing ok.

The main reason for the lack of confidence isn’t anything to do with a poorly performing economy, rather it’s the uncertainty over what is happening with Brexit. We’re no closer to knowing if the Withdrawal agreement will get through parliament in a few weeks. If not then we could still see a disorderly Brexit, and it’s this uncertainty that is keeping confidence low, and Sterling along with it.

Brexit still the key driver for GBP exchange rates

Businesses have no idea what trading conditions will look like in a few months when the date to leave the EU is here. If the withdrawal agreement gets through, then it provides the clarity that the markets are looking for, and it’s likely the Pound could rise significantly. If however no progress is made and the EU don’t make concessions, then the uncertainty surrounding the UK will remain, and the Pound is likely to fall.

Much then depends on what happens in a few weeks when parliament will vote on the deal. If they even do; it could still be delayed further if it’s looking like it still won’t get through.

Do you have a currency exchange requirement in 2019?

If you need to exchange currency in the coming weeks and months, then the uncertain times as we are experiencing at the moment make it more important than ever to speak to a currency expert to ensure you get the best rate, contract type, and time things correctly.

We offer exceptional rates of exchange, free consultations with expert brokers, and a range of contract types to help protect you against any adverse movements in the currency markets. Get in touch today to find out how we can help you.

 

Currency markets remain quiet during Christmas

Good morning. As you might expect, the currency markets have been very quiet this week during the Christmas holidays. GBP/EUR remains low at just below €1.11. Against the US Dollar, the Pound is also still low at the $1.2630 mark.

Markets open again in the UK today however there is little in the way of economic data that is likely to move rates. Similarly the UK government are on holiday so there is likely to be little from Brexit world to effect the Pound either. For these reasons we expect a flat market for the rest of this week.

This afternoon we’ll see some jobless numbers from the USA that could move GBP/USD rates. Tomorrow sees UK Mortgage approvals that could affect Sterling. Next week is also rather quiet so things won’t really get going until the 7th of January 2019.

We will be open and available to provide quotes and international payments, so get in touch if you need this service. We’ll be back in action next week to re-commence our regular daily updates on Sterling exchange rates.