Despite the Brexit uncertainty ahead of a crucial parliamentary vote next week the pound to Australian dollar exchange rate has recovered after the CFO of a Chinese Telecoms giant Huawei was arrested in Canada by US authorities after allegedly breaching US Iranian sanctions. There was recent optimism for a cooling of trade tensions after the G20 summit last weekend following a positive talks between US President Donald Trump and Chinese leader Xi Jinping.
A 90 day pause on future trade tariffs was agreed to try and find a way forward which in fact helped strengthen the Australian dollar. This new political upset could make the negotiations difficult especially if there is an escalation of events. Rates for GBP to AUD have now moved higher to 1.7650 for the pair.
Those looking to buy Australian dollars with pounds should be braced for major volatility around the time of the meaningful vote to be held in parliament on the terms of the withdrawal agreement and political declaration. It is looking highly unlikely that she will win the vote and the markets are now speculating as to how many votes she loses by. If she lost by under 100 the feeling is that this would be manageable and she could possibly go to Brussels in the hope of finding a solution to the Irish backstop. However there is talk that the number could be more like 200 which could see the Prime Minster go at this crucial stage at the end of the Brexit process.
Some Conservative members are suggesting delaying the vote to find a solution and to ovoid what could be a fatal defeat for Theresa May. The outcome of this vote will almost certainly dictate the future direction for the pound and clients would be wise to plan around this event. The volatility to follow could be similar to that seen after the Brexit referendum in 2016. Should a deal eventually be reached between Britain and the EU then there could be major gains for the pound and a good opportunity for buying Australian dollars. The risk of a no deal scenario though cannot be ruled out and is probably looking the more likely of the two options.
I have been helping clients move their funds to and from Australia at excellent rates of exchange for fifteen years. For more information and guidance timing your exchange around these events please feel free to contact me James at [email protected]