The pound to Australian dollar interbank exchange rate stands at 1.93 today. This is its highest in 41 months, or since June 24th 2016, the day after the UK’s referendum in favour of Brexit.
The GBP to AUD interbank exchange rate has hit this new 41-month high, because the latest opinion polls continue to suggest that the Conservatives will win a majority, at the UK’s election this Thursday.
According to the average of the latest polls, for example from Survation and BMG, the Tories have a 9%-10% lead over chief opposition Labour. As a result, markets have increased the odds of a Tory majority government by 15% compared to a week ago, up to 80%.
In general, investors want a single party to win this Thursday’s vote, to bring stability to the UK in 2020, and to finalise Brexit faster.
Pound May Be Affected by Concerns of Repetition of 2017 ‘Hung’ Parliament
However, looking to the four days remaining until the UK’s election, sterling’s value against the Australian dollar could be affected, by the continuing election uncertainty.
After all, at the UK election in 2017, former Prime Minister Theresa May was forecast to win a majority of MPs, yet she ended up with a ‘hung’ Parliament, in which no single party holds a majority of seats.
This obliged Mrs. May to pact with Northern Ireland’s (Democratic Unionist Party) to govern, and was partly responsible for the UK’s ongoing Brexit deadlock.
Given this, investors remain wary of a repeat of 2017’s election result, running up to the current Brexit deadline of January 31st 2020.
Australian Dollar Could Be Influenced, by RBA Lowe’s Speech, Mid-Year Outlook
Looking Down Under, the Australian dollar could be affected this week by several economic releases.
Perhaps most importantly, Reserve Bank of Australia (RBA) Governor Philip Lowe will give a speech today at 22.05 GMT, in which he may discuss the outlook for lower interest rates in 2020, as well as extraordinary monetary stimulus known as Quantitative Easing. Traditionally, these tend to weaken the currency in question.
In addition, this Tuesday at 00.30 GMT, Australia’s Mid-Year Economic and Fiscal Outlook will be released, informing us of Australia’s economic health and the government’s budget. A weak reading has the potential to influence the Australian dollar.
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