Pound to Australian Dollar Forecast: Election Approaches

Australian Economy Likely to be Worst Hit But to Bounce Back Strongest

The pound to Australian dollar exchange rate has slipped lower having hit a 3 ½ year high on Thursday morning after the YouGov poll put the Conservatives in ahead with a majority of 68. Rates did break over 1.91 for GBP VS AUD before drifting lower on Thursday. The election to be held 12th December remains the main talking point for sterling exchange rates and this high stakes election could see a material shift in the pound vs Australian dollar exchange rate. A majority for the Conservatives or a hung parliament could end up in considerable market movement for the GBP AUD pair.

This evening will see a 7 way podium debate although the Prime Minister Boris Johnson has come under attack for not appearing at a number of other debates. Next week will see US President Donald Trump in town and how the opposition parties portray his visit and his meetings with the Prime Minister could influence voters. A negative portrayal that the NHS for example could come under threat will inevitably be played upon by opposition parties. Expect an interesting week on the back of all the latest political developments.

Looking Ahead

With no Australian economic releases today focus looks to next weeks Reserve Bank of Australia interest rate decision. The RBA has cut rates twice this year and the markets are now guessing whether there will be another interest rate cut. The RBA has signalled it does not have a preference in going down the quantitative easing road although it does not rule anything out. Any rate cut or clues from this meeting as to future policy will likely have a sizeable impact on the Australian dollar exchange rate. Meanwhile the Australian economy is still feeling the squeeze from the US China trade war. Any progress on that reported Phase 1 agreement could result in a positive moment for the Australian dollar.

With no UK economic data releases today the focus will move to next week’s UK Purchasing Managers Index numbers for the manufacturing, construction and services sectors. Recent data for the manufacturing and services sectors highlighted that they were both in contraction. Next weeks UK numbers will be keenly eyed to see if this is turning into a persistent trend showing a downturn in the British economy.

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