On possibly one of the biggest days in the UK’s political history, the GBP slipped amidst jitters from the outcome the election. Fear and uncertainty has weighed on the GBP whilst the AUD continues its strong form, tipping the GBP/AUD exchange rate in its favour. However, with the results being announced that the Tory Party won a majority in government, the pound has sharply rose this morning as they held their power in the UK.
Pound Suffers Losses as Election Deadline Arrives but Sharply Claws Them Back With Tory Win
The pound suffered yesterday as the election arrived swift on the UK’s doorstep. The GBP was in a good position to start the day, up against all major rivals against the Japanese Yen. Thursday began the voting day with a large turnout, and this continued throughout the day. However, the GBP suffered losses to the AUD, which sharply rose in strength following President Trumps announcement that the US was very close to agreeing a deal with China.
The losses sustained by the Pound largely came due to the uncertainty surrounding the potential chance of a Labour comeback in the election. Investors were concerned that with recent opinion poll figures, that Labour may have a chance of closing the gap between the Conservative party and forcing a hung parliament. If this was to be the case then the ongoing instability of the UK market will likely continue which would spell disaster for investors.
With the announcement of a Tory win, the GBP sharply rose and made its way back to the top spot in the trading market. Worries of a hung parliament have been relieved and the likelihood of Brexit occurring is back on the cards for the start of 2020.
The AUD Continues its Good Run of Gains
For the AUD, it began Thursday enjoying its second straight day of solid gains over the USD. It was given a further boost later in the session upon President Trump announcing that a deal with China was imminent. With this news he also stated that the intended tariffs that were set to be imposed on China would be averted. This is positive news for the global economy as they were likely to upset the stability of the global market and would have impacted the AUD too.
The Australian Dollar is very China-sensitive as it is its main export trader, therefore the AUD has seen losses over the drawn-out process of the trade talks between China and the US. So, the news breaking that the deal is likely to be agreed upon brought only positivity and optimism upon the currency. For the GBP, the election news that the Conservatives won a majority will likely give the GBP an ongoing boost as Brexit deals are finalised.
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