Pound to Aussie dollar conversions counts as among the major currency to currency flows in the world. Both GBP (the pound) and AUD (the Aussie dollar) count among the forex majors, which are made up of the world’s eight most traded currencies. The pound is the fourth most heavily traded and the Aussie dollar the seventh. The historical ties between the UK and Australia mean that there is still a lot of business done between the two countries as well as many Brits living in Australia and many Australians living in the UK. UK companies trading with partners in Australia, and vice versa, often need to make pound to Aussie dollar conversions. The same can be said of nationals of one country who live in the other.
Sometimes these pound to Aussie dollar conversions, usually in the case of business transactions, can amount to sums well into the tens of thousands and higher. For higher value GBP/AUD conversion and transfers, it becomes even more crucial to get the best possible exchange rate (taking any added transfer fees into consideration). A fraction of a percentile difference in the pound to Aussie dollar exchange rate can easily add up to hundreds if not thousands of pounds on a major conversion. And if GBP/AUD conversions are a regular need of a business or individual, the conversion and transfer conditions become hugely important.
Do you need to make a significant one-off or regular pound to Aussie dollar conversion? Are you convinced you really know how and where to look to get the best deal or have been getting the best deal if you make GBP/AUD transactions on a regular basis? If you do or if you’re not, read on! We’ll take a look at the main pound to Aussie dollar options available to you and which will give you the best conversion rate for the value of or kind of transfers you will or do make.
The good news is that over the past few years new fintech companies in the currency conversion and transfer space have made the market A LOT more competitive. That’s great for the bank balance of the end customer – you. The bad news is that significant numbers of the companies and individuals making pound to Aussie dollar transfers still don’t know what’s available to them and which kind of service is best for what transfer. It’s not a one-size-fits-all market, at least not yet.
The best case scenario is you may not be getting the absolutely best GBP to AUD rate and charge terms available to you on every transaction you make. The worst case scenario is you are still falling into the trap of using one of the traditional currency conversion and transfer services that still offer, frankly speaking, rip-off rates. There is still enough pound to Aussie dollar transactions being made for which person or company transferring money doesn’t do enough research and pays over the odds for it to be a viable business model. Hopefully not for much longer.
But in the meanwhile, make sure you avoid these conversion traps. Let’s take a closer look at the difference in costs between different providers of pound to Aussie dollar conversion and transfer services. Even those which are great tend to offer the best terms for the particular kinds of transfers which are their primary target market. And that may not be your type of transfer!
Pound to Aussie Dollar Exchange Rate Options: The Good, the Bad and the Ugly
The pound to Aussie dollar spot rate, which means the base exchange rate with no spread or other fees attached, at the time of writing is £1:A$1.79455. It almost certainly won’t be exactly the same when you are reading this but the divergence in exchange rates and fees between different exchange and transfer services will most probably remain as of the time of writing. And we will of course update this article periodically to keep the information current.
So, at the spot rate of £1:A$1.79455, how many Aussie dollars will £10,000, £50,000 and £100,000 buy you?
£10,000 – A$17,945.5
£50,000 – A$89, 727.5
£100,000 – A$179,455
Let’s take a look at 3 different transactions across the different pound to Australian dollar options available to you with theoretical £10,000, £50,000 and £100,000 conversions and see which service will get you the best exchange rate and transfer fee final cost for which.
Will My Bank Offer Me the Best Pound to Aussie Dollar Exchange Rate?
It makes sense to start with the common conversion and transfer service trap you should almost certainly avoid as never your best option – your bank. Will the bank of which you have been a loyal account holder for years offer you the best GBP to AUD term? Unfortunately, no. Banks are not really set up as foreign exchange specialists and while they have always offered a currency exchange and transfer service, it has always been at exchange rates that can’t be considered competitive. It’s just not part of their core business and they consider it only worth their while at a price that it is better you as a consumer avoid. That can be said for pretty much any traditional high street bank at this point in time.
Above are the fees charged by Halifax. You’ll find while there is some slight variation, exchange rate mark-up and transfer fees will be relatively similar between UK high street banks. Firstly, you will pay a flat transfer fee of £20 if you are making a transfer to a bank account in Australia. This is reasonable within the context of a transfer of £10,000 and over, though will be unacceptable percentage in the context of smaller transfers of just a few hundred pounds.
For our £10,000 exchange we need to add 3.20% to the exchange rate of £1:A$1.79455, 2.4% for the £50,000 transfer and 2% for the £100,000 transfer. This will be approximately the bank’s spread on the spot rate, as per the table above. The exchange rates offered including spread would be:
£1:A$1.738 for £10,000 (+3.2%)
£1:A$1. 1.7525 for £50,000 (+2.4%)
£1:A$1.7595 for £100,000 (+2%)
Resulting in final transaction costs of:
£10,000 = A$17,380 + £20 transfer charge = total cost of A$565.5 + £20
£50,000 = A$87,625 + £20 transfer charge = total cost of A$2102.5 + £20
£100,000 = A$175,950 + £20 transfer charge = total cost of A$3505 + £20
Will A Fintech Offer The Best Pound to Aussie Dollar Exchange Rate?
Over the past few years a new wave of specialist currency conversion and transfer fintech companies have sprung up to address the glaring overpricing of currency exchange and international transfer service provided by high street banks. TransferWise, Revolut and Monzo are the three UK options which are currently the biggest and all three are also expanding quickly internationally. These services are able to bring down costs by employing a different model. They match transfers being made between two currencies, for example pound to Aussie dollar, to an inverse transfer coming from the other direction. In this example it would be an Aussie dollar to pound exchange and transfer. This means these specialists largely avoid having to pay intermediaries to physically transfer between countries or even use interbank currency exchange, which still involves a small spread.
The result is that for small transfer of up to several hundred pounds to Australian dollars these fintechs will almost always be your cheapest option. They offer an exchange rate which is as close to spot as is realistically possible for lower value currency conversions. They do however charge a transfer fee which is a fixed percentage of the overall value of the transfer. This means that for larger transfers of above a couple of thousand pounds into another currency they tend not to be so cheap. Their specialisation is smaller sums. So for our three example pound to Aussie dollar conversion and transfer transactions how much would it cost you, the sender, if you used a fintech service?
For all three transactions, the exchange rate offered is 1.79952, which is considerably superior to all three offered by the high street bank of £1:A$1.738 for £10,000 (+3.2%), £1:A$1. 1.7525 for £50,000 (+2.4%) and £1:A$1.7595 for £100,000 (+2%). However, the transfer fees of £45.79 for the £10,000 to Aussie dollar transfer, £224.99 for the £50,000 transfer and £448.98 for the £100,000 transfer reduces the difference.
A$17,912.80 – A$17,380 minus £20
A$89,571.13 – A$87,625 minus £20
A$179,144.05 – A$175, 950 minus £20
For the £10,000 transfer, using Transferwise offers an A$532.80 + £20 saving compared to the same transaction via our example high street bank.
For the £50,000 transfer, the saving is A$1946.13 + £20
For the £100,000 transfer, the saving is A$3194.5 + £20
Using the fintech service, despite the fact that its flat percentage transfer fee model is not best suited to larger transactions will, the figures above clearly show, save you considerable sums compared to using a high street bank.
But, can we do better yet?
What Is The Best Pound to Aussie Dollar Exchange Rate For Business and Larger Personal Transfers?
In most circumstances, for larger currency conversion and transfer transactions, the best overall deal will be offered by a specialist forex broker like CompareForeignExchange.com. Our partners only work with larger sums of over a few thousand pounds and operate a business model that is able to offer the best terms under those circumstances. So let’s see how we fare against TransferWise.
For the £10,000 transaction, our best offer is A$17,920 against TransferWise’s $A17,912.8. A small saving but a saving nonetheless.
For the £50,000 transaction, our best offer is A$89,750 compared to TransferWise’s A$89,571.13. We’re starting to come into our own. That’s an improvement just shy of A$180.
For the $100,000 transaction, our best offer is A$179,500 compared to TransferWise’s A$179,144.05. Now we’ve reached a saving of almost $A356. Not bad!
Is The Best Pound to Aussie Dollar Exchange Rate The Only Benefit A Specialist Currency Exchange Broker Offers?
Absolutely not! Firstly, for businesses or individuals who make regular pound to Aussie dollar transfers, our partners will almost always offer an even better exchange rate than that available for one off transactions. Secondly, risk management facilities are perhaps just as important as a great exchange rate. Exchange rates are dynamic and often change by half a percentage point or more over the course of a single day. During the Brexit process that volatility has been heightened further. Over 2018, the average daily volatility in the pound to Aussie dollar has been 0.84%. For a £100,000 transfer that can mean a difference of £840 for the same value of Australian dollar depending upon what time of the day the exchange is made.
That is why it is so important to have the kind of specialist currency risk management contracts that business currency exchange and transfer brokers offer. The two main contracts that can help you avoid significant losses if the exchange rate moves against you between the time you know you need to make a pound to rand transfer and you actually having to do so are:
Forward Contracts: this kind of currency risk management contract lets you lock in the best GBP to AUD exchange rate ahead of a transfer you know you will have to make in coming weeks or months. A pound to Aussie dollar exchange rate, plus a small premium, is offered based on the current market rates and is secured with a deposit. So if the pound’s strength against the A$ weakens over the intervening period until you actually have to make your transfer, it will not affect you. You’ve already locked in the best exchange rate based on current conditions.
Limit Order/Stop Loss Contracts: these currency risk management contracts allow you to target the best AUD exchange rate you believe is the realistic optimal up until the deadline by which you have to make your business transfer. A Limit Order targets the top end of the market and a Stop Loss the lower end. You, usually with advice from your account manager, will set a target Aussie dollar exchange rate and your exchange will be made the moment the exchange rate improves and the market hits that target. Or if the exchange rate turns in the wrong direction, a Stop Loss order will mean your exchange is automatically made before the situation deteriorates further.
By using these additional services smartly, you will be able to make additional savings on those you will have already made by choosing the specialist broker that can offer you the best pound to A$ exchange rate and fees ratio.
So, stop losing money on your Aussie dollar transfers or make sure you don’t if you have a sizeable one-off pound to Aussie dollar transaction to make. Get in touch and get the best exchange rate, the best fees and the best currency risk management facilities!