The influence of Trump on the Australian Dollar vs Sterling (Tom Holian)

Sterling vs the Australian Dollar has started to recover since the inauguration of Donald Trump last Friday as global investors are not yet sure how to react to the next President of the United States.

Typically when there is political uncertainty globally we see a selling off for riskier currencies including the Australian Dollar, New Zealand Dollar and South African Rand. All three currencies are commodity based and this means they typically weaken in times of political uncertainty as evidenced by the week’s movements for GBPAUD exchange rates.

UK GDP for the final quarter of 2016 was released on Thursday and this showed that the UK’s economy has remained resilient in the wake of the uncertainty caused by the Brexit vote back in June.

The UK is predominantly a service based economy and generally speaking the economy has remained rather buoyant over the last few months. It is clear without the Brexit issue dominating the headlines that the Pound would be a lot higher against the Australian Dollar but for the short term at least there are a lot of uncertainties ahead.

One of which is when/if Article 50 will be triggered. The general expectation is that this will take place by the end of March but as yet this has not been confirmed. Indeed, with the Supreme Court verdict confirming that the UK government will need to seek parliamentary approval there are still some obstacles ahead. The majority of MPs voted to remain part of the European Union even though the public vote was in favour of leaving.

Therefore, there is still an uncertain future for Sterling so although the UK economy is performing well it is not clear how the discussions will go.

Therefore, if you have a transfer to make in the weeks or months ahead involving Sterling and the Australian Dollar and you’re worried about what may happen to exchange rates it may be worth looking at buying a forward contract which allows you to fix an exchange rate for a future date. This is useful when planning budgets for that big move.

I have personally worked for one of the UK’s leading currency brokers for almost 15 years so if you have a currency transfer to make and would like to save money when buying or selling Australian Dollars compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian [email protected]