Pound to Australian Dollar Before Political News in UK (James Lovick)

The pound to Australian dollar exchange rate has fallen lower with rates now sitting above 1.85 for the GBP to AUD pair. Last night the Reserve Bank of New Zealand (RBNZ) cut interest rates to 1.5% to the same level as Australia’s. This is relevant for the Australian dollar as both currencies are known as commodity currencies which means there are some similarities when it comes to setting monetary policy by their respective central banks. The fact that New Zealand has made the move to cut interest rates at this time could help persuade the Reserve Bank of Australia (RBA) to do the same.

It is widely known that the RBA is contemplating a rate cut and this move from the RBNZ could result in an interest rate cut down under in the very near future. The RBA held interest rates last week so eyes now look to the next meeting which could result in a big shift for GBP AUD exchange rates. If there is an interest rate cut then there is likely to be Australian dollar weakness which could result in some better opportunities for buying Australian dollars with pounds.

Meanwhile in Britain there are some important political developments which will likely be announced today. Firstly the cross party talks between the Labour and Conservative parties are expected to come to an end. Any way forward with a compromise on the proposed customs union could help lift GBP vs AUD rates although with such opposition from the Conservative Party for a customs union, it seems difficult to find an appropriate outcome.

The pressure is also building on UK Prime Minister Theresa May who today will be expected to announce a time line for her departure as Prime Minister. Graham Brady who chairs the Conservative 1922 committee has reportedly given the Prime Minister until 4pm this afternoon for a statement. Expect considerable market reaction on any major news or suggestion that she may be leaving sooner than initially expected.

For more information on the Australian dollar and for assistance in making transfers either buying or selling Australian dollars then please contact me James at jll@currencies.co.uk

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