Australian Dollar Forecasts: Latest Predictions for the AUD vs Pound Sterling, Euro and US Dollar

The Aus dollar (AUD) exchange rate complex is under intense pressure at the start of the new month and it looks as though further weak trading lies ahead based on the most relevant forecasts at hand.

The declines tie-in with the forecasts contained in this article which confirm downside pressures are likely to persist, particularly against the all-powerful US dollar. (For mid-week updates on the Aus and New Zealand dollar's please see here).

The AUD has stabilised on Tuesday following the steep falls witnessed on Monday following the surprising drop of 11 pct in Australian building approvals in September which suggests the economy could be slowing down more rapidly than predicted.

The AUD also fell against the dollar, pound and euro after a survey on Saturday showed China's factory activity unexpectedly fell to a five-month low in October.

And readings on China's manufacturing and services sector released on Monday did little to shore up the Australian dollar, which is often used as a liquid proxy for China plays.

Australian dollar rates today (Wednesday 5th):

1. The British pound to Australian dollar exchange rate conversion: GBP/AUD surged 1.15 pct higher to reach 1.8391 following the release of today's strong UK manufacturing PMI data on Monday. At the time of writing the rate is at 1.8333.
2. The euro to Australian dollar exchange rate conversion: EUR/AUD is 0.07 pct higher at 1.4390. At the time of writing the rate is at 1.4386.
3. The Australian to US dollar exchange rate conversion: AUD/USD is 1.22 pct lower at 0.8691. At the time of writing the rate is at 0.8729.

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Note: The above quotes are taken from the global FX spot market. It must be noted that your bank will widen the spread on the above numbers when passing on their retail rate to customers. An independent FX provider will however guarantee to undercut the bank's offer thus delivering you more forex. Please see more on this here.

Pound to Australian Dollar Exchange Rate Forecast

The GBP/AUD exchange rate appears intent to cling onto the area around the support level at 1.82 - we note that the point has provided solid resistance through much of October with the pair bouncing higher off here three times in the month.

However, rallies have ultimately been shallow suggesting there remains little interest to see the GBP/AUD rate sent back to its best levels of of the year above 1.90. A break above this level could ultimately open the way to a broader sterling rally.

That said, the longer-term outlook will depend on how solid the support at the round level of 1.80 is.

Throughout the year the pound to Aus dollar exchange rate has refused to break below here for an extended period.

We reckon that the Bank of England's Minutes in the middle of November will prove crucial as to where the exchange rate ends the year.

Australian Dollar to US dollar Exchange Rate Forecast

The Aus dollar has broken above a minor resistance level against the US dollar this week but the overall pattern of short-term corrective price moves ahead of another push lower remains intact.

According to analysis issued by TD Securities, it is a developing bear flag on the charts that are suggesting that ultimately the AUD will decline.

"Daily trend momentum is currently weak and, if we do push lower, a break out is not guaranteed near-term. Over all though, we would rather look to fade AUD strength," says Shaun Osborne, analyst at TD Securities.

The Australian to US dollar exchange rate (AUDUSD) has recovered off the early 2014 low steadily through October but gains have been relatively shallow and the weekly charts highlight the fact that the AUD has failed to hold on to strength; "below 0.8640/60 targets a quick drop back to 0.84/85," says Osborne.

Euro to Aus Dollar Exchange Rate Forecast

The euro appears intent to break lower and revert to the 2014 trend which is to the downside.

TD Securities noted last week that the EUR had missed an opportunity to trade higher earlier in the month and looks to be paying the price now; weakness below the 55-day MA—which has served as a good benchmark of support/resistance in the past few months signals the likelihood of more weakness ahead towards 1.40.

"Trend momentum is picking up bearishly across a range of timeframes—particularly on the short-term studies—suggesting limited scope for corrective gains near-term. We see resistance at 1.4300/10," says Osborne.