How a UK general election could affect the Pound to Australian Dollar forecast

AUD GBP Higher Again Despite WA Shutout

From recent reports, we know that the UK will be holding a general election on the 12th December 2019, should the House of Lords pass the bill backed by lawmakers in the House of Commons this Tuesday.

The UK prime minister Boris Johnson is taking a huge risk in hoping to achieve a parliamentary majority, with the promise of delivering Brexit. However, if this does not occur, there is a chance the UK could be back to square one with not one party winning a clear majority.

Current state of the pound to Australian dollar standings

The volatility of the market concerning the GBP is ensuring that forecasters remain second guessing themselves. With the outcome hanging in the balance and resting in the hands of the British public once more, the forecast for the strength of the British Pound and its relationship with other currencies like the Australian Dollar is likely to continue up until the election date in December.

With the likelihood of a general election being called for the UK in December, shifts have been observed in currencies. The election could reduce the chance of a ‘no deal’ Brexit taking place. In doing so, GBP softened against an outperforming AUD this Tuesday, but forecasters are expecting a post-referendum high in the coming weeks.

What the election means for the future forecasting of the GBP/AUD relationship

The GBP and AUD pairing is likely to be ever-changing throughout the deliberations in Westminster. Reports are suggesting that despite currencies typically not favouring elections, this one could be different. This is because the election could offer the chance for some much-needed clarity on the direction of the UK’s future economic regime. There is also a chance that investors may be keeping close watch as the possibility of Brexit being scrapped altogether is not out of the picture.

Experts are predicting that the Pound could well rise as far as 1.94 against the Australian Dollar up ahead. This would be GBP/AUD rate’s highest point since the referendum back in 2016, this is if Boris Johnson ensures that a ‘no deal’ Brexit does not occur. Reports from Australia have seen the RBA cut rates three time this year to boost Australian growth and inflation.

The AUD is showing promising rises, but analysts are warning that this may be short lived with both domestic and international factors (like Brexit and US-China trade talks) threatening to limit the growing rate. The proceedings from Westminster are likely to be one of the major factors affecting the GBP/AUD so the outcome of December’s proposed election is likely to be an important one.

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.