Over the last 4 weeks GBP/AUD exchange rates have increased by 6 cents making a AUD $300,000 purchase £5,340 cheaper. The slowdown in Australia is putting a major strain on Australian dollar exchange rates. The housing market is under severe pressure due to the tightening of lending standards throughout 2018. China is slowing due to the ongoing trade war which means less commodities are leaving Australian shores and the Reserve Bank of Australia have hinted at cutting interest rates in a bid to stimulate economic growth.
All in all, it’s hard to see how the tides will change for the Australian economy unless major changes are made to monetary policy and the US and China secure a trade deal that works for both parties.
One positive is that unemployment numbers have remained stable over the last couple of months. This week Australia will release their latest unemployment numbers and 5% is expected. If the number is released at 5%, I expect the Australian dollar could benefit on Thursday morning. However earlier in the week, the RBA minutes and House Price index numbers are released on Tuesday morning. Both releases I expect could disappoint, therefore waiting till Friday to sell Australian dollars seems a risky strategy.
GBP/AUD exchange rates have been on the charge not just this month, but since the start of the year. GBP/AUD has increased 15 cents over the last 100 days. The increase comes from the demise of the Australian dollar, but also a strengthening pound. Over the last couple of weeks MPs have voted for numerous amendments to Theresa May Brexit plan, and what we have learnt is that there isn’t the appetite in Parliament for a ‘no deal crash out’ Brexit. This is good news for clients that are selling Pound to buy Australian dollars.
However it’s not all good news for clients buying Australian dollars with pounds. This week MPs may be back in the House of Commons voting on Theresa May’s deal for the third time. However it’s unlikely the vote will take place unless the PM has convinced the DUP to back her deal. If we don’t see a vote before Thursday the PM will ask the EU for an extension of Article 50 and I expect this could be a lengthy extension, which could put pressure on the pound.
Brexit has the potential to have a major impact on GBP/AUD exchange rates. If you are converting pounds and Australian dollars, short, medium or long term I would strongly recommend getting in touch to discuss your upcoming requirements and together we can devise a strategy that works for you.
If you have any questions about exchange rates, please feel free to drop me a message using the form below: