Pound to Australian Dollar Outlook: How Will the Election Influence GBP/AUD Exchange Rates?

How Will the Election Influence GBP/AUD Exchange Rates?

Throughout 2019 and since the EU Referendum vote in 2016, the pound to Australian dollar exchange rate has been influenced by continuing changes in the market sentiment relating to Brexit.

This election appears to be a defining moment on Brexit, with the potential for a Boris Johnson victory to pave the way forward for the Withdrawal Bill to be passed. This may lead to more certainty relating to the next direction on Brexit, and may well influence the pound ahead.

GBP/AUD interbank rates have been up to and over the 1.90 mark in recent days and weeks, presenting some of the best times to buy Australian dollars with pounds since the day before the EU vote back in 2016. Will the pound rise higher against the Australian dollar?

How the Election Can Affect the Pound

The result of the election looks to be key, with the potential for some big swings which are typical of an election and the pound. Historically, sterling has found political uncertainty weighs on the currency as we get closer to an election. The expectation is for a Conservative victory at present which might well see increased confidence in the UK economy and outlook.

However, a Conservative victory does not fully solve Brexit, there will still be all number of hurdles ahead, including the prospect of getting the actual Bill passed through parliament, plus how the UK and EU plan to evolve their trading relationship ahead. There are fairly tight timelines on this, with reports this morning in The Times suggesting Michel Barnier, the EU’s Chief Negotiator regards the timeline as ‘too short’.

Sterling has proved its sensitivity to the developments on Brexit numerous times and with the current situation far from resolved where Brexit is concerned, the potential for increased volatility remains a topic of consideration in the market.

If you would like to learn more about factors influencing GBP/AUD exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.