Sterling falls versus Australian dollar, as Brexit outlook up-in-the-air

Sterling falls versus Australian dollar, as Brexit outlook up-in-the-air

GBP to AUD rate decrease

Sterling has fallen by -0.48% versus the Australian dollar on the interbank market in the last day, from a peak of 1.8902 yesterday to 1.8812 today at the time of writing.

In part, this is because the UK’s political outlook remains unclear, with Westminster undecided whether there’ll be a UK general election in the coming weeks, and the EU debating whether to grant the UK another Brexit extension of three months, or just two weeks.

Boris delivers election ultimatum

One reason why the pound to Australian dollar interbank exchange rate has weakened overnight, is because UK Prime Minister (PM) Boris Johnson has delivered what’s effectively a general election ultimatum.

Mr. Johnson says that he’ll only present the bare minimum of laws to Parliament, and no annual budget, unless the opposition Labour Party supports his call to hold a general election.

Labour leader Jeremy Corbyn wants assurances that there won’t be a ‘No Deal’ election before voting for an election. Yet Mr. Johnson leads a minority Conservative government, unable to pass laws without opposition support. So Westminster looks increasingly at stalemate.

Australia’s business activity weakens in October

However, looking forward, sterling’s value versus the so-called Aussie dollar could be influenced, because Australia’s economy slowed this month, said respected statistics recently.

According to IHS Markit’s composite PMI (Purchasing Managers Index) for October, Australia fell to just 50.1, from 52.0 in September. This is barely above the 50.0 figure that signals economic growth, so suggests that Australia’s private sector has come to a virtual standstill.

These statistics follow the International Monetary Fund’s (IMF) economic forecasts for Australia last week, which predicted that Australia’s GDP (Gross Domestic Product) will slow more than most industrialised economies this year and next.

As a result, Australia’s PM, Mr. Morrison, may have to decide whether to increase public spending, to support Australia’s flagging GDP growth

So far, Mr. Morrison has pledged not to do so, instead preferring to stick to his budget rules. Yet if Australia’s economy eases further, the PM may face increasing calls to turn on the spending taps.

If you would like updates for GBP/AUD rates or have an upcoming currency transfer, feel free to contact me directly using the form below.