Over the last 10 weeks pound to Australian dollar exchange rates have been falling week by week. At the beginning of May, mid market exchange rates were trading at 1.8850 and current levels are 1.7750. To put the fall into monetary value a AUD$300,000 transfer now costs clients an additional £9,850 and I expect rates could get worse for clients that are buying Australian dollars.
New UK Prime Minister next week: What could happen to GBP/AUD rates?
Next week the UK will announce who will be taking over No10 and consequently taking the reins on the Brexit negotiations. Front runner Boris Johnson has made it clear that the UK will be leaving the EU at the end of October, with or without a deal and this is why the pound is suffering at present. My personal opinion is this won’t happen as MPs within Parliament won’t allow it. Nevertheless, further uncertainty is on the horizon for the UK and I expect this will cause economic growth to stall and the pound to lose value.
What challenges is the Australian economy facing at the moment?
Down under we know the Australian economy has problems of its own. The housing market is struggling and wage growth number dwindle along which has prompted the Reserve bank of Australia to cut interest rates to record lows. However, the Federal Reserve (US central bank), have hinted that an interest rate cut is likely at the end of the month and I expect a sell off of US dollars to occur and the commodity based currencies including the Australian dollar to benefit.
GBP/AUD Economic data
In regards to economic data, it’s a quiet finish to the week for the UK and Australia. Next week is also fairly quiet, however the two key releases to look out for are mortgage approvals in the UK, which helps identify the state of the UK housing market and RBA Governor Philip Lowe speech on Thursday. However, for clients converting GBP/AUD the Tory leadership contest I expect will be the key driver for the currency pair next week. If you are planning to make a transfer and would like assistance in a bid to achieve fantastic rates, feel free to get in touch by filling in the form below.