Sterling exchange rates have started to fightback against all major currencies including the Australian Dollar as Theresa May will be replacing current Prime Minister David Cameron on Wednesday.
Theresa May was initially expecting a 9 week leadership campaign but Andrea Leadsom chose to withdraw which gave May a clear run.
Politically this has been taken well as it allows a bit of certainty to return to the markets and with May such a seasoned politician she is probably more likely to have the gravitas needed to settle things down.
Down under Malcolm Turnbull has been given another term and typically this would have helped to strengthen the Australian Dollar further against Sterling but the Pound has recovered owing to the change in leadership in the UK.
Indeed, the Pound has suffered huge losses since the Brexit vote by as much as 30 cents against the Australian Dollar and could Theresa May coming in be the catalyst for a recovery in Sterling exchange rates?
Later this week however the Pound is likely to come under further pressure when the Bank of England meets to discuss monetary policy. Governor of the central bank Mark Carney was a huge supporter of remaining in the European Union and he has suggested since that the UK could look at cutting interest rates or Quantitative Easing in the near future.
Personally, I think it would be too early to look at change monetary policy just yet so if there is no change we could see Sterling make gains vs the Australian Dollar. Arguably it will be the minutes published immediately after the announcement that are likely to cause volatility for GBPAUD exchange rates.
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