Over the last month the pound has continued to struggle along against most major currencies due to the pressures of Brexit, however the pound has made gains against the Australian dollar as the Australian dollar has been weakening more than the pound.
The ongoing trade war between the US and China is a key concern for investors within Australia as China is Australia key trading partner. Furthermore the ongoing problem with the housing market is also a concern. Interest rates are set to remain on hold for the time being, and we await further information from the Royal Commission in regards to lending standards. If it’s the case that Australian banks are set to tighten lending standards further, I expect house prices in the major cities will decline further putt further pressure on the Australian dollar.
However for clients that are converting GBPAUD for the time being all eyes should be glued to the Brexit negotiations. MP’s return to work on the 7th January and their first job is to debate Theresa May’s Brexit plan and then the week after to have a meaningful vote. Last month the Prime Minister cancelled the debate and the meaningful vote as she knew she was going to lose, and unfortunately for the PM I expect this will be exactly the same this month.
The PM canceled the vote as she wanted further reassurances from the EU and to date it doesn’t look like this has happened. The EU have made it clear there will be no more negotiating and the deal on the table is the final deal. Therefore I expect MPs to vote down the deal and one of a few scenarios could occur. I believe we will either see a motion of confidence against the government or Theresa May will try to go back to Brussels and renegotiate. Either way I expect this to be a tough month for the pound against the Australian dollar.
If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company [email protected].