The results of the EU Referendum will be witnessed at 2pm on Friday in Australia, and with so much uncertainty over which way the results will swing, the markets are likely to get incredibly volatile from tomorrow.
As it stands, GBPAUD exchange rates are still attractive at 1.96 and in the event the UK remain within the EU, rates above 2.0 will likely be witnessed.
To the contrary, a Leave vote will signal pair weakness, but this could be the start of much bigger problems for the Australian economy.
The timing of the EU Referendum could not have come at a worse time, problems in China continue to dominate economic news and the FED’s decision to keep Interest rates on hold due to the Referendum are just small signs of things to come.
The global markets are vulnerable, developed countries like the US and UK are struggling to generate growth despite record low Interest rates, this was witnessed recently when the RBA cut Interest rates to a record low of 1.75%, the EU remain in negative Interest rate territory.
A Brexit, therefore, could cause economic turmoil, and where do Investors move their money when times are tough? Into safe-haven currencies such as the US Dollar and away from commodity currencies.
Exports have been one of Australia’s key drivers of economic growth and a shaky global economy could have ramifications for employment and overall growth. It’s worth mentioning that during the recession of 2008 commodity prices sank, a similar scenario to the recession of 2008 would likely be negative for all commodity currencies.
Australia also rely on British tourism, 700,000 British tourists visited last year, a Brexit could cause a decline in British tourism and a fall in GDP.
A Brexit will have implications for the global market and AUD won’t be resilient to this major event. It’s unlikely that the RBA will further cut Interest rates until the full impact of a Brexit was observed.
If you are in the middle of buying or selling a property overseas or if your business has upcoming requirements then you need to make sure you have a proactive broker on your side. There are options available to you including limit orders, stop losses and forward contracts, all of these can help you minimise your currency risk in this difficult market.
We here at Australian Dollar Forecast all work for one of the largest currency brokerages in the U.K with access to exceedingly competitive and rarely beaten rates of exchange, along with awards for our customer service. If you feel that we may be beneficial to you then feel free to get in touch with me (Daniel Wright) the creator of this site many years ago and I will be more than happy to help you personally. We deal with bank to bank transfers ranging from £1000 to multi-million pound exchanges and will be able to explain all of the options to you in clear and easy to understand terms. Email me today on [email protected] with a description of what you need to do and a contact number and I will contact you at the earliest opportunity. You can also call our trading floor hotline during trading hours on 01494 787 478.