Pound to Australian Dollar forecast: December election approaches

GBP/AUD Forecast: Will the Australian Dollar Overcome the Coronavirus Fears?

The pound to Australian dollar exchange rate has slipped lower to 1.87, after the GBP/AUD pair had seen a strong rally in recent weeks. With no major developments expected over Brexit in the coming weeks and with parliament expected to be dissolved with an election on the horizon, the pound is likely to see market movement in the run up to the election as speculation mounts as to who will govern the United Kingdom. With more political parties campaigning in this election the strategy of tactical voting is likely to be commonly used. If this election is to revolve about Brexit, then the result could throw up some surprises.

Political parties and where they stand

The Liberal Democrats are seeking to revoke the Brexit process following the democratic vote to leave the EU in 2016 whilst the Brexit Party could seek to take votes away from the Conservative Party and thus split the Leave vote. A big win from any of the parties could change the course of Brexit and this will likely have a direct impact on pound to Australian dollar exchange rates. Whilst the Conservative Party are leading slightly ahead in the polls it is far from clear as to whether the election will generate a majority. Those with pending requirements looking to either buy or sell Australian dollars would be wise to plan around this election set for 12th December with high volatility to be expected as developments unfold. Let’s be clear this election is proving more difficult to predict than usual with Brexit thrown into the equation which means that the stakes are high in terms of market volatility.

US interest rates and the impact on the Australian Dollar

The US Federal Reserve cut interest rates last week by 0.25% and its future policy making decisions are likely to influence the strength of the Australian dollar. The Australian dollar is impacted by the level at which interest rates are set in the US as investors move between the currencies depending on where the highest yield is to be found. The US and China meanwhile are reportedly moving towards reaching an agreement on trade. Wilbur Ross the US Commerce Secretary has said that a phase one deal should be reached later this month.

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