Pound to Australian Dollar marooned under 1.80 as no deal Brexit fears continue
The pound to Australian dollar exchange rate remains below the 1.80 levels with the GBP vs AUD interbank exchange rate sitting at 1.7820 this morning. Brexit remains a dominant factor which is keeping pressure on the price of sterling. Under the new leadership of Boris Johnson the chances of Britain withdrawing from the EU without a deal have increased which has been reflected in a decline in the price of sterling. This morning in the UK there is much talk of a potential general election around the time of the planned withdrawal date of 31st October.
Is a UK general election on the horizon: How could this affect GBP/AUD exchange rates?
However, there is an expectation that the Prime Minister could set the date for a general election after Britain has already departed the EU something that the leader of the opposition party Jeremy Corbyn is trying to prevent. There is speculation that MP’s will table a vote of no confidence in the Prime Minister. History has demonstrated that in the run up to a general election there can be volatility and degree of sterling weakness before the event. In this case how the election takes place and when could have a profound impact on GBP to AUD exchange rates.
Some of the bookmakers are pricing a high probability that there will be a general election with Betfair now offering odds that imply a probability of 57% that an election takes place in 2019. Those with pending requirements either buying or selling Australian dollars may wish to plan around these major developments in these interesting political times.
At the moment the markets are speculating on how British politics will unfold and any breaking developments which give a clearer guide as to when a general election could take place will likely result in high volatility for the GBP vs AUD pair.
Reserve Bank of Australia: Could there be further interest rate cuts?
Meanwhile the Reserve Bank of Australia (RBA) has been cutting interest rates to try and fend off a slowdown in the economy. This week the Reserve Bank of New Zealand surprised the markets by cutting interest rates by 50 basis points which was double the amount expected. The RBA is likely to pay attention to this bolder move and the RBA could act again later this year and cut interest rates further which would likely result in Australian dollar weakness.
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