The pound to Australian dollar exchange rate has fallen lower after following comments from the US Treasury Secretary Steven Mnuchin. He stated that the US China trade deal is getting closer and he felt that it is 95% complete. This is good news for the commodity currencies to include the Australian dollar as they tend to benefit when the global economy is performing. The ongoing trade war between the US and China which has lasted for almost a year continues to weigh heavy on the Australian dollar as concerns for global growth remain. A weaker global economy means less production in China which is of course Australia’s largest export market for its raw materials. Any further developments will likely have a big impact on the GBP to AUD pair.
Brexit meanwhile continues to be the single biggest driver for sterling exchange rates. As the leadership contest continues as the two prospective Prime Ministers Boris Johnson and Jeremy Hunt battle it out the markets are incredibly interested to who will take the top job. With two very different approaches to Brexit the pound could travel in either direction depending on who becomes PM. Boris has made clear that he wishes to leave the no deal option on the table to try and force a deal by the latest deadline of 31st October. The prospect of no deal will likely keep the pressure on the price of sterling and there could be some even better opportunities ahead for those looking to covert Australian dollars to pounds. Those with pending requirements would be wise to consider planning around this important change in British politics with a volatile few months expected.
The Reserve Bank of Australia will meet again after the weekend on Monday for the next interest rate decision. The central bank cut rates to record lows at the last meeting and there is a high chance there will be another cut next week. Such a move should prove negative for the Australian dollar although any movement will also be driven by any interest rate decisions made in the US. The US Federal Reserve are widely expected to cut at the next meeting and possibly by as much as 50 basis points which may help limit any losses for the Australian dollar.
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