John From Moneycorp

The Pound vs Australian dollar

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    Hi everyone

     

    This thread will provide updates on the pound and Australian dollar. A round up of the latest news from the past weak is below.

    Sterling has slumped to a six month low against the Australian dollar. The British pound has continued its New Year downward path against the ‘Aussie’ dollar.

    Why?

    There are mounting fears that the UK’s economy contracted during the 4th quarter of 2012. Clearly the risk of a return to recession enhances should the first three months of 2013 show no signs of improving growth prospects.

    Australia’s currency on the other hand has shaken off the recent unexpected rise in the nation’s unemployment rate. Global investors have instead remained more focused on Australia’s all important trade relationship with its largest partner China, who recently delivered an initial 4th quarter Gross Domestic Product result highlighting an annualised growth rate improvement to 7.9%.

    Australia’s growth prospects should be further enhanced as its second largest trade partner, Japan, looks to expand monetary stimulus measures certainly by 2014, but perhaps far sooner.

     

    This Friday’s first release of the UK’s Gross Domestic Product performance for the 4th quarter from the Office for National Statistics will help define the short to medium term direction of this currency pair.

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    The Australian dollar was unchanged on the week against sterling. Against the US and NZ dollars it lost a cent. The damage was done by lower-than-expected inflation figures. In 2012 consumer prices increased by only 2.2% instead of the 2.4% predicted by analysts. Investors fancy that the softer inflation readings will give the Reserve Bank of Australia room to cut its benchmark interest rate if it believes the economy needs a boost.

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    There has not been too much news over the past week but key highlights are below.

     

    The Australian dollar did slightly better than the pound, strengthening by a third of a cent in a week shortened by Monday's Australia Day holiday.

     

    The Aussie's big break came with Friday's stronger-than-expected US employment report. As well as helping the Greenback, the data also sent the Canadian, Australian and New Zealand dollars higher.

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    It was a bit of a struggle for the Australian dollar last week, as it was for the other commodity-related currencies. The Aussie lost a cent and a half to the US dollar and two and a half cents to the pound. It was almost unchanged against the New Zealand dollar.

     

    Underlying its relative weakness was the renewed nervousness of investors about peripheral Europe and their consequent reluctance to become any more involved with "risky" currencies. Allegations of corruption in the Spanish prime minister's office and a resurgence in the electoral popularity of Silvio Berlusconi in Italy gave rise to concern about changes of government that could mean the abandonment of deficit-reduction measures and a re-escalation of the euro zone sovereign debt crisis.

     

    Sterling and the US dollar both benefited from this change of emphasis but the pound had an extra advantage. The Bank of England governor-designate made clear that he did not believe it would be a good idea for the Bank to move away from targeting inflation. Investors were relieved to hear it and so was the pound.

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    The Australian dollar is strong due to good consumer confidence numbers released this week – this has helped the Aussie against the pound.

     

    Currently, there is very little or no good economic news coming out of the UK.

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    The Australian dollar remains very strong against the pound.

     

    So far in 2013, after the yen, the pound is the second-worst currency performer in the developed world.

     

    As we know, the Australian economy is very strong in comparison with the UK - Australia hasn't experienced a recession in 21 years.

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    A brief review of the past week is below.

     

    The Australian dollar fared better than sterling but the difference was just a quarter of a cent.

     

    Helping the Aussie were figures showing a 71.5k increase in the number of people in employment, eight times as many as forecast.

     

    Sterling's leg up came from the Bank of England governor, who was uncharacteristically upbeat during a TV interview. He said "recovery is in sight" and implied that the pound had fallen far enough.

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    A little review of the past week below.

     

    The Aussie and the pound are unchanged against one another. Sterling covered a range of one and a half Australian cents without ever really threatening to head off in either direction.

     

    Analysts cannot work out whether or not the RBA's 3% Cash Rate has further to fall but with it at that level for now, and with a triple-A sovereign credit rating, investors remain comfortable with the Aussie, keeping it strong, overvalued or not.

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    Some good news for the UK!

     

    The economy has avoided falling back into recession. The Office for National Statistics preliminary estimates have been released this morning for gross domestic product (GDP) – it showed the UK economy grew by 0.3% in the first three months of the year.

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    The Australian dollar has weakened recently against the pound.

     

    This is mainly down to the following - poor data released in Australia (disappointing building approvals figures), plus US stocks and commodity prices have weakened.

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    In an attempt to counter slowing growth in the country's mining sector, the RBA in Australia have cut its interest rate to a record low of 2.75% from 3%.

    Following this news, the Australian dollar is weaker.

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    The Australian dollar has been much weaker against the pound recently - please see a review below.

     

    A bad week for the Aussie saw it lose a cent to the pound and nearly two to the US dollar. From its long term highs in March and April it has fallen by -7% against the pound.

     

    The -0.4% monthly fall in retail sales didn't help. Nor did the construction sector purchasing managers' index, which was down by four points at a seriously negative 35.2. The trade surplus looked good though, with exports up and imports down. Best of all was the 50k rise in employment and the downward tick in unemployment from 5.6% to 5.5%.

     

    The trump card on the downside, however, was the Reserve Bank of Australia's decision to cut its benchmark interest rate from 3% to 2.75%. The decisions itself was not a surprise but many investors had expected the move to come in June or July.

     

    The start of this thread mentions interest rate announcements can have an impact on the exchange rate and that is what has happened here - a decision taken, which took most by surprise, therefore we've seen a movement in the GBP/AUD rate.

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    Hi everyone, the latest currency review is below.

     

    At the tail end of the field the Aussie had another losing week. It conceded a cent and a half each to the pound and the US dollar.

     

    When it came to Australian economic data the Aussie didn't have much to play with. The increase in consumer inflation expectations did not sit easily with investors, who suspect the next move for interest rates is downwards, and there was nothing good about the fall in consumer confidence. Ford rubbed in the overvalued nature of the AUD when it announced the closure of its loss-making Australian assembly facility.

     

    It did not help the Aussie when the chairman of the US Federal Reserve raised the possibility that the Fed could wind down the bond purchase programme that sees it doling out $85bn of new money every month. The assumption is that a wind-down will have an adverse impact on demand for commodities and energy.

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    The Aussie remained on the defensive for a fifth week, losing a cent to sterling.

     

    Strong building permit issues provided only temporary help. Commodity and energy exporters are still out of favour. Investors are looking ahead to when the US Federal Reserve turns off the money tap and spoils the market for commodity and energy expo

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    The Australian dollar continues to weaken against the pound – this is following GDP figures released in Australia which were weaker than excepted.

    GDP figures are usually a key indicator of how a country’s economy is performing.

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    The recent rout of the Australian dollar has continued after disappointing growth data for the first quarter of 2013 was published by the Australian Bureau of Statistics. The Australian economy expanded at a slower rate than expected between January and March this year building the case for another rate cut by the Reserve Bank of Australia.

     

    A strong economy, relatively high interest rates and robust demand for its natural resources from its main export partner China, had helped to underpin the strength in the Australian dollar in recent years; however these supporting factors are now beginning to recede. China is experiencing a slowdown of its own economy which will likely lead to a drop in demand for Australian exports.

     

    Sterling on the other hand has been buoyed by a round of improving economic data releases so far this week. First came news that UK’s manufacturers had reported their highest activity levels in 14 months, next came the construction sector with a surprising return to growth driven by residential building. The best was saved to last with the dominant UK services sector reporting a surge in activity, delivering its strongest reading since March 2012. With all three sectors now growing for the first time for a year there are clear signs that the UK recovery is gaining traction.

     

    It can be worth exploring the different options available to you when buying or selling Australian dollars – more information can be found here: http://moneytransfer.pomsinoz.com/various-ways-to-buy-currency.html

     

    Thanks

     

    John

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    After a bad week at the end of May the Aussie had an awful one at the beginning of June, losing two cents to the US dollar and seven to the pound.

     

    The Aussie and the New Zealand dollar both continued to feel the heat of investors' suspicion that the US Federal Reserve is preparing to wind down its quantitative easing programme, which churns out $85bn of freshly-minted money every month.

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    John we are about to transfer some money with you as arriving in oz on 21st june, do you think we should hold out a bit longer so we get more for our British pound?

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    John we are about to transfer some money with you as arriving in oz on 21st june, do you think we should hold out a bit longer so we get more for our British pound?

     

    If you haven't already, I would recommend speaking with your Account Manager at Moneycorp.

     

    They can go through in detail the different options available when buying your currency. These can help you take advantage if the exchange rate moves in your favour and also protect you if the rate moves the other way.

     

    Thanks

     

    John

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