The pound is falling lower against the Australian dollar as the Brexit bill to invoke Article 50 has been held up in the House of Lords where an amendment has been requested to protect the rights of the 3.2 million EU citizens currently living in the UK.
Why is this important for the pound? The change was voted on last night with an overwhelming majority to support the amendment which ultimately could mean that UK Prime Minister Theresa May’s Brexit timetable to invoke Article 50 in March could be delayed.
The markets don’t like uncertainty and any hold up could make things more difficult for the pound as the clarity as to the terms of Brexit that most are looking for could be delayed. It has already been an uncertain 9 months for the UK since the Brexit vote and no answers to the important questions will be offered for the EU until Article 50 has been invoked.
The general consensus is that the House of Lords are making their concerns known but it is widely expected that when it comes to the crunch it will be the Lords who will back down. This period of ping pong between the House of Commons and the House of Lords is likely to continue over these next two weeks which does carry an uncertain period for the pound. There could be some of the best prices available for selling Australian dollars in the next couple of weeks.
Data is light today in the UK with just UK construction data from the Purchasing Managers Index which could create some market movement. It is more likely to be developments in the British political arena which are more likely to be the driving force for the pound.
Buying Australian dollars?
For those clients that are feeling the pinch from the weakness of the pound against the Aussie there could be some better opportunities on the horizon. There is a growing chance that Australia may have to cut interest rates largely as a result of less demand from China. This won’t happen overnight but any noises of interest rate cuts are likely to push the dollar weaker.
If you would like further information on sterling or Australian dollar exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]