Refreshed Brexit negotiations and economic uncertainty in China

The UK is facing some potentially history-shaping events at present. Uncertainty is rising and unrest is creeping in amongst politicians and the public alike which is reflected in the ups and downs of the pound’s strength against the Australian dollar.

So what’s impacting the GBP/AUD interbank exchange rates?

The uncertainty of Britain’s future within the European Union has played a huge part in the pound’s strength against the Australian dollar for well over 3 years now, but recent events have caused even greater fluctuations than what can usually be expected.

The pound was up again after Prime Minister Boris Johnson announced that Europe had accepted his Brexit deal. But now after asking for an extension past the October 31st deadline, we are seeing more sheepish approaches to backing Sterling once more – despite holding on to the majority of its recent gains.

Increased general election talks

Much in the same vein as Brexit, general election talks being spurred on by Jeremy Corbyn are creating more instability in the house of commons – something which has seen the AUD strengthen against the pound.

The more likely a no deal Brexit and general election become, the stronger the AUD becomes against the pound, so this is certainly something you’ll want to be monitoring over the coming months.

China’s economic uncertainty

Since the Australian dollar relies so heavily upon exports to China, it is at the mercy of any uncertainty of its economy.

With the US and China locked firmly in a trade war, the Asian’s economic climate has suffered greatly, having an unfortunate knock on effect on the strength of the AUD against the Pound.

This can all be reversed if the trade war is brought to an end, but with that not looking likely to happen any time soon, the AUD is likely to continue to suffer.

Keep an eye on relations between the US and China, especially if you have a vested interest in the Australian Dollar.

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