Pound holding against the Australian Dollar
Despite the weakness in sterling exchange rates as a result of recent Brexit uncertainty, the pound to Australian dollar exchange rate has held up surprisingly well. The Brexit deadline of 31st October 2019 inches closer with volatility expected for the GBP/AUD pair. Rates are currently sitting above 1.78 for and the direction of travel will likely be impacted on whether or not a no deal Brexit can be stopped by parliament. The no deal outcome which is being championed by UK Prime Minister Boris Johnson is not favoured by a number of MP’s from opposition parties and some Conservative rebels who might also be prepared to vote against the government in a confidence vote.
Pound to Australian Dollar forecast: What could happen politically in the UK?
The prospect of a general election, the possibility of a labour government in power or even a delay in Brexit are all generally seen as negative options for the UK economy. Only this morning Jeremy Corbyn has stolen the headlines by suggesting he should become a caretaker Prime Minister if a vote of no confidence in the Prime Minister was to become successful. The question is whether parliament has the mechanism to stop a no deal from happening and whether or not Boris Johnson is able to take Britain out of the EU before a general election could even take place. These are likely to be the main points that drive the GBP to AUD pair in these coming weeks with high volatility expected as new developments unfold as to the technicalities of what is and isn’t possible in parliament.
Australian jobs data and the RBA
Meanwhile down under the Australian economy has performed better than expected after strong employment numbers were released overnight. 41,100 jobs were created in July against expectation of just 14,000. The news will be welcome for the Reserve Bank of Australia (RBA) which has just cut interest rates twice to record lows. To try and fend off a downturn. The RBA held rates at the last meeting in July and this stronger data would suggest the central bank may continue to pause before taking further any action. Any further action from the central bank later on in the year amidst further decline in the economy could result in further Australian dollar weakness.
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