When sending money from Australia to the UK, here’s how to find the best exchange rate for your Aussie dollars to British pounds.
Whether you’re investing in a business in London or sending money to your mom in Edinburgh, a strong exchange rate will get you more bang for your Australian buck.
How does the Australian dollar trade against the British pound historically?
The Australian dollar was introduced in 1966 to replace the Australian pound. At the time, the dollar was maintained under the Bretton Woods system, a monetary management system that established the rules for the commercial and economic relationships among the US, Canada, Western Europe, Australia and Japan.
Under the Bretton Woods agreement, currencies were pegged to the price of gold, with the US dollar a reserve currency linked to gold. But the Australian dollar was effectively pegged to the British pound under this agreement.
The global financial crisis in 2008 had an effect on both the Australian dollar and British pound. The Australian dollar reached highs of 2.474488 per pound in October 2008 from 2.065693 per pound in July 2008. By August 2009 the Aussie dollar had dropped to under two dollars per pound. And in 2011, the Australian dollar became the fifth most traded currency in the world behind the US dollar, euro, yen and British pound.
Even though “Brexit” — or Britain’s proposed exit from the European Union voted by referendum in June 2016 — greatly affected many currencies around the world, its effect on the Australian dollar was minimal. The AUD/GBP exchange rate went from 0.519547 in June 2016 to 0.572899 in July 2016. With the UK’s exit from the UN scheduled for March 2019, experts predict that the British economy will remain volatile.
AUD > GBP exchange rate history
We’ve put together the annual average exchange rate for the Australian dollar against the British pound from 2007 to 2016.
|AUD = GBP||0.551105||0.492231||0.547796||0.619212||0.653805||0.644086||0.594875||0.504556||0.458458||0.418793|
Here’s the monthly average exchange rate for the Australian dollar over the past 12 months.
|Month||AUD = GBP|
What affects AUD > GBP exchange rates?
Five main factors affect the Australian dollar and British pound: monetary policy, price inflation, confidence and sentiment, economic growth using the gross domestic product (GDP) and the balance of payments. These factors can offer a comprehensive view of the direction a currency is going.
A clear example of how this works happened in 2015. Heavy flooding in Australia’s eastern states — particularly in Queensland — affected Australia’s GDP and inflation. A primary factor used to gauge the health of a country’s economy, the GDP went on to affect how the Australian dollar traded in global markets. From June 2015 to February 2016, the Australian dollar remained above 2.0 to the pound.
Compare today’s rates from providers who can send AUD to GBP
Ultimately, how a currency pair trades is subject to many factors. Since currency value is relative to other currencies, it’s difficult to accurately project exactly how much an exchange rate will be in the future. However, with Brexit looming, the Australian dollar could strengthen over the British pound in the next few years.
When choosing a money transfer service for currency exchange, it’s best to look for an exchange rate that’s closest to the mid-market rate and comparable to historically low exchange rates within the past year.
What is the mid-market rate?
The mid-market rate is what your money’s actually worth on the global market compared to another currency. It’s the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves.
Use the mid-market rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.