British Pound vs Australian Dollar (GBP/AUD) Trend Forecast into Mid 2011
Currencies / British Pound Oct 14, 2010 - 07:11 PM GMTAndrea asks : We are traveling to Perth in March 2011, are we best changing our money now? Or is there a chance the exchange rate will be better in the new year? Please help.
In answer to Andrea and others who have posted similar comments requesting an analysis of GBP/AUD, this analysis seeks to extrapolate recent in depth analysis on the Dollar and British Pound with regards to the Aussie Dollar.
04 Oct 2010 - British Pound Sterling GBP Currency Trend Forecast into Mid 2011
The British Pound is in a multi-year bull market against the U.S. Dollar, I expect the current phase of this bull market to see GBP trend higher into mid 2011 targeting a rate of between £/$ 1.80 and £/$1.90 as the below forecast trend graph illustrates (current £/$ 1.58), though I would not be surprised if GBP trades above £/$1.90. I also expect sterling to strengthen against the Euro that targets a trend high E/£ 1.30 (current E/£1.15). However the forex markets will be just as volatile as they have been during the past 2 years as future sovereign debt and banking sector crisis will temporarily result in a surge of safe haven dollar buying, which will present future opportunities to short the dollar.
12 Oct 2010 - USD Index Trend Forecast Into Mid 2011, U.S. Dollar Collapse (Again)?
The USD index is targeting a trend to a new all time low in the region of USD 69-70 by mid 2011, that will be followed by a strong rally that could see the Dollar retrace all of the decline back towards USD 80. The problem is with the timing of these trends as volatility will be high. It's a tough exercise but I conclude in the USD taking some time to base following the mid 2011 low before the subsequent bounce to 80 takes place. Therefore the forecast trend is USD 69-70 by mid 2011 followed by a bounce to 80 by October 2011. The immediate future is suggestive of an imminent bounce towards 80 by early December before the final swing lower to a new all time low takes place as illustrated by the below forecast trend graph.
The above analysis forecasts GBP 17% rally by mid 2011, against a USD 9% fall by mid 2011, which therefore implies a relatively strong sterling trend against that of other currencies to the tune of a net average of +8%, which on face value suggests GBP could strengthen against the AUD by mid 2011 by upto 8%.
British Pound / Australian Dollar Technical Analysis
Whilst I do not have the time to perform an in-depth analysis of the Aussie Dollar, however I can test to see if the above estimated relative strength is likely to pan out against AUD or not.
The Australian dollar is clearly in a powerful multi-year uptrend that has its basis in structural fundamentals both economic and resource based rather than technical. The range appears to be between a low of 0.58 and a new all time high 0.67 against the last 0.62. The trend targets a GBP/AUD rate of between 0.64 and 067 by mid 2011 (+3% to +8%).
What would I do if I NEEDED to convert from Sterling to AUD by Mid 2011?
Given that the Aussie Dollar is expected to continue strengthening against sterling, I would bite the bullet and transfer an amount of 5-10% every week, and take advantage of any dips to below 0.60 (could trade to 0.58 to transfer larger percentages).
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By Nadeem Walayat
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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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