Sterling has continued to fall against the Australian Dollar and we have already seen a big fall this morning for Pound Sterling exchange rates.
Since the Brexit Sterling has fallen by over 10% against the Australian Dollar and today Bank of England governor Mark Carney will announce his most recent Financial Stability report.
I expect the focus to be on potential risks to the UK economy caused by the uncertainty of the EU referendum and any mention of a potential interest rate cut or further Quantitative Easing could cause problems for the Pound.
UK construction data came in at its lowest level in 7 years during June compared to the month before with a figure of 46 compared to 51.2 in May. Anything below 50 shows contraction and such a low figure has caused a big lack of confidence in Sterling.
The Reserve Bank of Australia kept interest rates on hold at 1.75% last night which was expected owing to the uncertainty of what is happening politically in Australia at the moment.
With the Australians experiencing a hung parliament at the moment according to legislation they have now 13 days before they have to form a new government.
Typically when this sort of issues occurs this will often weaken the currency involved but at the moment the currency markets are focusing on Sterling’s weakness caused by the Brexit fallout rather than specific economic data.
Australia is one of the few nations that has maintained its AAA credit rating and this could be at risk if the country does not settle itself politically but generally speaking I think things will sort themselves out during the next fortnight.
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