There are many variables which can affect the strength of a currency. Factors like politics, the economy and inflation rates are some of the more common ones. Current events like Brexit have heavily impacted the rates of currencies such as the Australian dollar.
Having an understanding on how these world events are having an effect on the rates of varying currencies is in your interest if you have a requirement to buy or sell the currency in question.
If you have been keeping up with current events you may know that one of the major ongoing events at the moment is Brexit and the UK’s everlasting departure from the EU. Recently, with the confirmation of a general election occurring in December, the outlook for the AUD has risen with its relationship to the GBP. This is because of a higher chance of the UK leaving the EU with a deal opposed to a potentially catastrophic ‘no deal’ or even the chance of Brexit being scrapped altogether.
In the past couple of days, Boris Johnson, the UK prime minister has issued apologies to his Tory party members for being unable to deliver his ‘do or die’ Brexit plan. Leaving both himself and the UK unsure what is to come next, but for now the outlook looks positive for interlinking currency partnerships with the GBP, especially the AUD.
Ongoing trade wars
Other events have also taken place recently which has seen the AUD rise and encouraged potential buyers of the currency to do so now. Trade wars have been a major contributor. With the Australian economy losing steam amidst the China trade wars, the Reserve Bank of Australia (RBA) have begun to slash interest rates in a bid to prevent an economic slowing because of these trade wars. There are rumours that more cuts to interest could happen in November.
The AUD/GBP interbank exchange rate is currently at one of its highest points and is trading at around 1.87; the rate is starting to steadily pull back after recent rallying. Analysts have voiced their opinions that there is a chance that the upward trend observed between AUD/GBP could continue, and if so, could rise to around 1.92.
The main topics affecting the rising rate are the meetings between the RBA for the AUD and meetings with the Bank of England (BoE) this coming week. Recent highs and the possibility of further gains have seen some investor moving funds into the Australian dollar.
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.