In recent weeks the pound has been falling against most of the major currencies however remains buoyant against the Australian dollar. The reason for the pounds decline is that the UK public will be visiting the polling stations once more to decide who will run the country for the next term. Past history tells us when there is an election the currency in question comes under pressure and therefore losing ground against its counterparts.
However the pound has performed relatively well against the Australian dollar as the Austrian dollar has problems of its own. It was only yesterday the Australian dollar took a battering due to further falls in iron iron prices, Australia’s largest export. Furthermore Westpac announced capital expenditure figures have disappointed and the Chinese manufacturing activity is slowing which has led to the two per cent drop in iron ore.
As there is only 6 days to the UK general election, this week I expect the pound to come under further pressure and GBPAUD exchange rates to fall back towards 1.70. Polls are narrowing and suggesting that the Conservative party won’t win a majority however I personally believe they will pull through.
If I were buying Australian dollars I would not put all of my eggs in one basket and would therefore purchase 50% before the election and 50% in the future just in case we see another shock announcement like we did 12 months ago when the public decided to vote out of the European Union.
For Australian dollar sellers the slowdown in China is not going away and I believe this will continue in the months and in fact years to come. Therefore if I had Australian dollars I expect rates to be at their most volatile towards the end of the week on the eve of the election and thats when I would make the conversion.
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