GBP to AUD rates begin the week at 1.83 after losing almost 2% last week due to Brexit uncertainty

Australian election cause volatility for pound to Australian dollar rates

After a strong start to the year for GBP exchange rates we saw a sell-off in the currency’s value last week as the path to Brexit becomes more complicated, and the UK failed to leave the EU on the expected date of the 29th March.

At the time of writing, the pair are trading at 1.8328 after dropping into the later 1.82’s earlier this morning before recovering somewhat. The downward pressure on the pound increased last week after UK Prime Minister Theresa May lost a third attempt at pushing her Brexit deal through parliament. The House of Commons had more members in favour of the deal last Friday than on the two previous occasions although the DUP party once again voted against her deal which appears to remain one of the key issues for May moving forward.

New round of indicative votes

The risk of the UK now leaving on Friday the 12th of April has increased, as this date is when the extension to Article 50 elapses. During the day today there will be another round of indicative votes in Westminster regarding the next steps, and although not legally binding we expect the options of remaining within the customs union and a ‘confirmatory referendum’ to be included as these options gathered the most support in the indicative votes last week.

Brexit is expected to remain the key driver of GBP value moving forward until the issues are resolved, and bookmakers have recently changed their odds to suggest another general election could take place this year (odds currently sit at 50%).

From the Australian side the key topic this week will be the latest interest rate decision from the Reserve Bank of Australia (RBA). The announcement is scheduled for the early hours of tomorrow morning and although no changes are expected the chances of an interest rate cut this year have increased so expect any allusions to this from the RBA to hold the potential to move AUD exchange rates.

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