The pound to Australian dollar exchange rate has rallied higher with rates breaking over 1.90 for the GBP vs AUD pair. The pound has started the week well, making gain across all of the major currencies despite a looming general election on the horizon which can always make for an uncertain period. Focus is on this hugely important election set for 12th December and which will inevitably carry major consequences for the future course of Brexit. Brexit Party leader Nigel Farage announced last week that it would not put candidates in seats which have previously been won by the Conservative Party. He has gone further by not contesting about a dozen marginal seats which the Conservatives have some chance of winning. If Boris Johnson wins a majority then it will break the gridlock in the British parliament and it will allow the latest withdrawal agreement to go through. If however there is a hung parliament or a coalition of largely remain parties then this could unsettle the price of sterling as the economic outlook would be less clear in such an outcome.
UK GDP Data Released
UK Gross Domestic Product data last week arrived weaker than expected at 0.3% against expectation of 0.4%. The continual Brexit uncertainty after 3 ½ years has had a marginal negative impact on GBP exchange rates. However, the weaker data failed to have a negative impact on GBP to AUD exchange rates as the prospect of a majority by the conservatives at the next general election appears to be driving sterling higher. The polls at the moment have Boris Johnson with a small majority although anything could happen in this election. Expect high volatility in the weeks to come and on the morning of 13th December. Those with pending requirement looking to buy or sell Australian dollars would be wise to plan around this event.
Australian Employment Data Disappoints
The Australian economic outlook has deteriorated further after Australian unemployment numbers weakened to 5.3%. The data disappointed the markets having risen from 5.2% prior. The Reserve Bank of Australia have cut interest rates this year although the central bank are unlikely to make any further rate cuts until 2020. The RBA minutes will be released tomorrow and may offer more insight as to the banks thinking on future monetary policy.
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