The pound to Australian dollar exchange rate has fallen lower with rates having briefly dropped below 1.79 this morning for the GBP to AUD pair.
Sterling lower as no deal Brexit becomes credible possibility
Brexit continues to drive the price of sterling lower as a no deal Brexit outcome has become a credible possibility. Conservative favourite for Prime Minister, Boris Johnson is expected to push forward the prospect of a no deal to ensure that Britain does in fact leave the European Union by the latest deadline of 31st October 2019.
The new British Prime Minister is expected to be announced 23rd July and there is likely to be considerable volatility in the months ahead under new leadership.
Those with requirements to either buy or sell Australian dollars are likely to see high volatility in the GBP vs AUD rate and there could be some good opportunities to convert amidst the volatility.
US interest rate cut could affect Australian dollar forecast
The Reserve Bank of Australia (RBA) cut interest rate a second time last week having now made two back to back rate cuts.
Focus now is placed on the US Federal Reserve and whether there is an interest rate cut for the July meeting which will be held at the end of this month. There is an increasing chance that the US Fed under Fed Chair Jerome Powell will cut interest rates by 50 basis points which is likely to result in volatility for all of the major currencies including the Australian dollar.
A big shift in policy from the Federal Reserve could see large flows of funds moving between the US dollar and Australian dollar as investors weigh up risk and whether to hold funds in the safe haven of the US dollar.
Meanwhile, in Australia, the economy is struggling which is why the RBA has taken these measures, taking interest rates to the lowest ever on record. With a cooling housing market and concerns over inflation and wage growth as seen in most other parts of the western world there could be more trouble ahead for the Australian economy.
The latest news on the ongoing US China trade war is that both sides are struggling to reach an agreement. Any further slowdown in the Chinese economy and the wider global economy could be seen as negative for the Australian dollar.
If you have any questions about the pound to Australian dollar exchange rate or have a questions about currency transfers, please feel free to contact me (James Lovick) directly using the form below.