The Pound to Australian Dollar exchange rate has been gently slipping as fresh uncertainty over Brexit sees the Pound dropping lower against all currencies. This is rather frustrating for clients buying Aussie Dollars with Pounds since Friday of last week and the early morning today started off rather well.
This is because on Friday the release of the latest NFPR (Non-Farm Payroll) economic data from the United States helped see the Pound trade higher against the Australian Dollar. The Aussie Dollar is closely linked to the US Dollar and as the US Dollar rose on Friday, it dragged the Australian Dollar down lower with it.
This weakened the Aussie against Sterling presenting slightly better rates, the move was compounded by the news from the UK Government that a position on Brexit was agreed and clients concerned with GBPAUD saw a good lift.
Of course, nothing is straightforward with Brexit or in UK politics. Yesterday evening saw David Davis, the UK Brexit Secretary resigning, followed by Boris Johnson today. Boris Johnson is a key figure in the Leave campaign and his resignation could see a further chain of events which might ultimately see Theresa May unsettled as PM.
GBPAUD levels will now take a direct cue from the next steps on this news and whilst the mood from the Chequers meeting was positive, the scope for rates to slip further seems high. The weakness in the UK Government is important since it is ultimately them who shall deliver on Brexit, if Theresa May’s position is severely undermined, it could jeopardise further the loose plans they have.
The prospect now for another election or indeed a vote of no confidence is very high and this could see the Pound lose more ground. If you have a transfer to consider then the fallout from this event will be key, as will the release of the Government White Paper on Brexit, released later this week.
The interbank rate is currently in the 1.77’s, a move above 1.80 is now looking very challenging and a move back towards the mid 1.70’s or lower cannot be ruled out.
For more information on the latest news and trends, please contact myself directly using firstname.lastname@example.org to discuss strategy and targetting the maximum levels.