The pound to Australian dollar exchange rate has dropped sharply today after flash Purchasing Managers Index data arrived much weaker than expected and the lowest on record. Those looking to buy or sell Australian dollars would be wise to plan around all the latest Covid-19 developments as much of the focus is looking towards how long this recovery will take. The UK manufacturing and services sector nose dived this morning highlighting how grave the situation is economically. Bank of England member Vlieghe has said the UK is facing its fastest and deepest slump in “possibly several centuries”. The Confederation of British Industry also said that business sentiment is also falling at a record pace.
Australian Economy and Reserve Bank of Australia Measures
Meanwhile in Australia the Reserve Bank of Australia is maintaining its record low interest rates as we are now seeing in all corners of the globe. This change in recent years and particularly in recent months has long term implications from the Australian dollar Traditionally the Australian dollar has been used for the phenomenon known as carry trading but with rates so low all over the world the carry trade is not a viable option at present. What happens in the US with interest rates in the months ahead is also likely to have a big impact on GBP vs AUD. How the Australian economy bounces back is crucial for where the dollar heads next but it is important to note that the Australian economy relies on the rest of the worlds performing too.
Brexit Uncertainty Causing Volatility for GBPAUD Exchange Rates
On the plus side at least in the construction sector Taylor Wimpey has announced it will resume building soon. Brexit meanwhile as about to be in centre focus with an announcement from the EU’s chief negotiator Michel Barnier expected soon. There is much uncertainty as to whether or not the implementation period will be extended beyond the end of 2020. Pressure is building on government for this to happen but the stance from Downing Street is that there will be no delay. Brexit remains on of the single biggest driver for sterling exchange rates and any developments here could have a sizeable impact on GBP to AUD exchange rates.
If you’d like to discuss these factors and how they could impact an upcoming currency transfer, feel free to get in touch with me, James Lovick, using the form below.