GBP/AUD rates have been extremely volatile of late, with the pair shifting almost 20 cents over the past month. This extreme market movement has come in line with increased momentum surrounding the UK EU referendum, which is currently being fought out in poll stations around the country. Whilst the pro’s & cons have been debated for weeks, many of us will be making an emotional decision when we enter the polling booth today. Personally, I feel that an In vote is the lesser of two evils and whilst I’m not a huge fan of many facets of the EU, I do believe that the current economic and political climate lead me towards feeling more secure being part of a wider community.
In terms of the effect the referendum has had on the currency market, the Pound has seen huge swings over the past few weeks, as investors tried to second guess which way the vote would go and factor this in to GBP exchange rates. This week’s increase for the Pound indicates that an In vote is now the more likely outcome but with so many peaks and troughs of late, a further twist to the saga is highly plausible. The AUD has found some support today and it may well be that the markets had factored in a Remain vote and we are now seeing a retraction in the rates.
The markets clearly view a Remain vote as the best outcome, so expect the Pound to solidify its position should this occur. I have no doubt that we will see heavy GBP losses should the out vote gain enough support to gain victory. I do not like to gamble when it comes to large sums of money and therefore I would be looking to protect any Sterling positions ahead of tomorrow’s results.
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