Pound to Australian Dollar movement expected as Parliament is set to resume on September 3rd
The pound to Australian dollar exchange rate is holding on to its recent gains with rates for GBP vs AUD sitting at 1.8140. After the hot UK bank holiday weekend, the markets will now focus on all the latest Brexit developments this week with political fireworks expected as we approach the 31st October Brexit deadline. High volatility is to be expected for GBP to AUD exchange rates as parliament will return 3rd September after the summer recess.
Boris Johnson makes clear that the UK will leave the EU in October
UK Prime Minister Boris Johnson made clear to MP’s yesterday that there will be no way of stopping Brexit and that Britain will leave the EU at the end of October. However, a meeting will take place later today with MP’s across the political parties who are opposed to Brexit and in particular a no deal. There has been much talk of a vote of no confidence which could be issued by leader of the opposition Jeremy Corbyn although whether he could succeed in putting in place a caretaker Prime Minister remains to be seen. There is also the very real prospect of a general election something that could see additional volatility for GBP/AUD.
Those looking to buy or sell Australian dollars are likely to see heightened volatility in these coming weeks with a big swing in either direction depending on whether or not a Brexit deal is reached. Those with a sizeable amount to transfer would be wise to consider planning around these developments as the 31st October deadline counts down.
Key events that may impact GBP/AUD exchange rates
Meanwhile the Australian Reserve Bank of Australia Governor Philip Lowe spoke at the Jackson Hole Symposium in the US and highlighted that political shocks are having as much impact on the financial markets as economic shocks. He added that following two recent interest rate cuts in Australia the central bank is limited in what it can do from here on. It would suggest the central bank may be reluctant to take additional steps to loosen monetary policy which could help support the Australian dollar going forward. In the event of a no deal Brexit the Bank of England has signalled that interest rates may need to be cut which could see the differential between rates in Australia and the UK widen which could see GBP/AUD fall lower.
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