In a time of seemingly endless uncertainty, the outcome of Brexit is one that will not only affect the UK but also every country linked with it. The Pound to Australian dollar outlook is likely to be affected massively by the direction Brexit takes.
Individuals looking to buy or sell AUD should be keeping a close eye on what comes out of Westminster surrounding the events of Brexit in the very near future.
Brexit uncertainties leave buyers and sellers hanging
With Boris Johnson unable to deliver on ensuring Brexit takes place on the 31st of October, another extension has been put in place giving the UK government up to 31st January to deliver on 2016’s referendum.
Add to this the fact that the UK Prime Minister has called a General Election for December, and subsequent votes in parliament have landed on a date of the 12th and the UK political landscape doesn’t look any more certain than it has for the past few years.
The uncertainty surrounding Brexit and the future of UK politics as a whole has experts suggesting that volatility is likely to be expected between the pound and Australian dollar respectively.
Talks surrounding Brexit have had both positive and negative influences on the Australian dollar, with positive talks between Boris Johnson and Leo Varadkar just a few weeks ago lifting the GBP/AUD rate.
However, as the Brexit momentum begins to slow, the highs experienced with the pound to Australian dollar exchange have eased off a little as the next steps in Brexit become less clear.
Risks of Brexit and the outlook for the GBP
The recent extension means the likelihood of a no deal Brexit is now reduced significantly, which is why the Labour Party Leader Jeremy Corbyn agreed to support the motion for another general election in December. This was good news for the pound, which, should a no deal Brexit be officially stopped, is likely to strengthen significantly. If a no deal Brexit does become a reality however then it is likely to help those looking to sell AUD to buy GBP.
Global trade wars and knock-on effects from Brexit may affect the rate of AUD
With countries like China reporting a plateau in their economic growth, the lowest forecasts in around 30 years, there is concern that a similar effect may be felt in countries around the world.
The Reserve Bank of Australia (RBA) may look to cut interest rates in a bid to keep up in the Trade Wars, but in doing so, these lower interest rates will more than likely equate to making the AUD weaker.
Investors on the Australian side are warned that they may need to contend with Trade Wars and the varying Australian interest rates at this time.
The outcome of Brexit is likely to affect the relationship of AUD/GBP. Volatility is likely to be expected in a time where the direction of Brexit is unclear. Buyers and sellers alike are advised to keep an eye on the news from Westminster as it unfolds.
For more Pound and AUD news or if you have a currency requirement you can get in touch with me, James Lovick, directly at [email protected], or call +44 (0) 1494 360 899 to discuss these factors in more detail.