Boris gives the Pound a boost vs the Australian Dollar
The pound to Australian dollar exchange rate has managed to fight back following the news that Boris Johnson of now the new Prime Minister of the UK, reaching interbank levels of 1.7912 against the Aussie dollar at the time of writing.
He won the leadership election convincingly which came as no real surprise. Boris has been campaigning for Brexit whilst Jeremy Hunt originally voted to remain. Therefore, in the eyes of the majority of Tory members there was only one obvious candidate. Since coming in earlier this week the pound has improved against a number of different currencies including vs the Australian dollar.
Global economy under pressure: Trade wars and Brexit influencing GBP/AUD exchange rates
Earlier this week the International Monetary Fund cut the global growth forecast for both this year and next. They have predicted growth for 3.2% this year. This is down from its previous forecast of 3.3% predicted in April. Interestingly, the IMF have raised the UK’s growth forecast from 1.2% to 1.3%. The impact of the forecast may have an influence on global risk appetite. Therefore, this could cause a problem for the Australian dollar, which is often seen as a riskier currency as it is commodity based.
One over-riding issue though is the risk of a no deal Brexit. Boris Johnson has not rejected this from happening this could cause a big risk to global economic growth.
The other risk for the Australian dollar is the ongoing uncertainty caused by the US China trade war. US Treasury Secretary Steve Mnuchin has said a deal is close. However, Trump has claimed that further tariffs may be imposed if a solution cannot be found. Therefore, I think we could see GBP/AUD exchange rates move towards 1.80 in the near future.
I have worked in the foreign exchange industry since 2003 for one of the UK’s leading currency brokers so if you would like further information or a free quote then contact me directly and I look forward to hearing from you.