It is no secret that politics affects the currency rates across the world. The outcomes of particular political events can shift the going rate of both the home countries currency as well as others that interact with it on the global market.
One of the more well-known pairings is the AUD to GBP rate. Recent political factors have caused shifts in the trading rate.
No matter which country you are reading this from, it is very likely that you will be aware of the Brexit proceedings which are ongoing in the United Kingdom. The twists and turns along the way in the UK’s departure from Europe has caused a stir amongst many currencies and the Australian Dollar is no different.
In recent news, the upcoming general election has analysts warning that the outcome will be difficult to predict. This is due to voter volatility, a possible revival of the anti-Brexit Liberal Democrats as well as the unpredictable effects which will arise from the UK’s first past-the-post electoral system which will likely be a complicated matter. Labour leader, Jeremy Corbyn has brandished the Tories Brexit plan as ‘Thatcherism on steroids’.
Attention is firmly focused on the unfolding events of Brexit. The outcome of the general election in December is likely to cause a shift in the currency rates across the world. There are several outcomes which may arise. A conservative majority, an opposition party majority such as Labour, or even Brexit being taken off the table completely.
Ongoing trade wars have been forcing the banks of several countries to cut their interest rates in a bid to stay in the global trade race. Talks between the US and China have been observed and they appear to be going well. Analysts have proposed that Australia and China share a close link in economies, and should China benefit in the trade talks it is likely to boost the AUD also.
Meetings between central banks
Closer to home for the AUD, meetings are taking place this week with members of the Reserve Bank of Australia (RBA). The RBA decided not to cut interest rates in trend with other countries like the US recently as they observed a lower jobless rate, which was the first time since February alongside 26,200 full-time jobs being added last month. The meetings are likely to discuss the viability of future interest rate cuts should they be necessary. Should this action be taken, the AUD is likely to be affected, depending on the decision of the RBA.
You can email me (Joseph Wright) on [email protected] and I will endeavour to get back to you as soon as I can if you would like to learn more.