It’s been another eventful 24 hours in the UK, as members of Parliament have voted in favour of a general election on the 12th December. Today the bill makes its way to the House of Lords and should be approved by the end of the week, which will mean the campaigning begins. The market reaction has been limited as it appears investors had 2nd guessed that an election was inevitable.
How has the GBP/AUD rate reacted to election news?
History tells us that general elections can put pressure on the currency due to the political uncertainty, however this is no normal election. In some ways its an election to break the Brexit deadlock, therefore expecting the pound to decline in value in the run up to December 12th may not be wise. If the Liberal Democrats and Labour do well in the polls, this could indicate that another referendum may materialise after all and therefore the pound may strengthen.
For clients that are buying Australian dollars, you may wish to in touch with one of our currency specialists to outline your currency requirements and run through your options in more depth, using the form below.
RBA interest rate
When converting currency it’s always important to analyse both currencies. Westpac have only recently upgraded their forecasts for the pound vs Australian dollar as they believe crashing out is now extremely unlikely and the chances of further interest rate cuts from the RBA is on the horizon. This is supported by the Governor of the RBA as Philip Lowe yesterday hinted that he would be prepared to cut interest rates further in the future.
Short term the key data releases to look out for import/export and building permit numbers released in Australia Thursday. The ongoing trade war between the US and China has a direct impact on trade numbers, therefore it will be interesting to see if the numbers hit the consensus. Building permit numbers give a good indication to how the economy is performing as its an indication to corporate investment. For more information on the data releases and how they could impact your Australian dollar transfer, feel free to get in contact.