Peter Lavelle - 16.03.2012
Here is my latest update regarding the UK pound to Australian dollar exchange rate this past week (8th March to 15th March) as well as my forecast of where it might be heading next.
It might be useful if you're thinking about starting a new life in Australia, and are wondering what exchange rate you might get!
The UK pound has gained more than a cent against the Australian dollar this past week, climbing to a two-month high of 1.50 on the nose, as the diminishing outlook in China continues to pull down on Australian economic prospects.
In particular, Australian trade entered deficit last month as Chinese manufacturing slowed, while more than 15,000 jobs were shed from the Australian economy.
Looking ahead, it looks likely the UK pound will continue to gain, as China's economic machine winds down in the coming months.
The Australian trade balance fell to a -$0.673bn deficit in February, as Chinese demand for Australian commodities (including coal and iron) reached a recent low.
Until just a month ago or so, it seemed Chinese demand would continue to fuel an endless boom in Australian mining and, while the outlook remains strong, it no longer seems quite so invincible.
This sudden weakness is reflected in other parts of Australia's economy too. Job creation entered negative figures last month, falling to -15.4k, meaning more than 15,000 jobs were shed from the economy. This signals the extent to which Australian prospects are weak without the boon of Chinese demand. It compares to +48.2k job creation the month before.
Economists had been predicting this slowdown in China economy for some time, but it's only in 2012 it's really become apparent.
Speaking in Beijing last month, premier Wen Jiabao told the National People's Congress that he is setting the lowest growth target since 2004 for this year, at just 7.5%.
This is a reflection of the weakness in China's export markets, such as Europe, which is currently in recession.
Last month, China's trade balance also entered deficit, falling to -$30.5bn, meaning it imported far more than it exported.
Of course, this is all fantastic news if you're planning to emigrate to Australia. It means you're likely to get more Australian dollars when you change currencies from UK sterling. Looking ahead, the foreign exchange could yet improve further, although sterling is unlikely to reach the 2.50 heights of 2008 any time soon.
I will return with my next foreign exchange update next week.
Have a great week,