For the GBP, the start of Wednesday was not a promising one. Recent polls have been released to give an oversight of the current standings for the upcoming election. One particular trusted poll highlighted that there is a risk of a ‘hung parliament’ at the UK’s election later today. The GBP/AUD exchange rate now stands at around 1.92 at the time of writing.
Risk of Hung Parliament Causes Panic for the Investors of GBP
With the results from the trusted poll (YouGov) pointing towards a potential risk of a hung parliament, the strength of the GBP declined. A hung parliament refers to no single party holding a majority of seats. As a result of this, despite a government still being able to be formed, the likelihood of Brexit becoming finalised is decreased.
Markets are concerned that should a hung parliament occur that the UK may miss yet another Brexit deadline (31st January 2020). If this is the case, the UK could run the risk of exiting the EU without a deal or a “No Deal” or once more having to ask Brussels for a further extension. With the risk of all or any of the above, the Sterling sunk as uncertainty has once again got the better of the GBP.
House Prices Rise for Australia but Consumer Confidence Falls
For the AUD, it will likely welcome the slide from the GBP in the interlinking exchange rates between the two. With mixed data being released for Australia this week, positive news broke that house prices rose by 2.4% in the third quarter, from July to September. This figure was above forecasts and NAB’s business conditions index increased by 2 points in November to a figure of 4. However, everything isn’t bright for the AUD as the release of Westpac’s consumer confidence index fell to minus 1.9% this month, which was less than November’s 4.5%. This figure set alarm bells ringing that Australia’s economy is still not home and dry and that potential risks are still there for the future of the country’s economy.
For the rest of the week, the major player will be the UK’s general election which takes place today. The outcome will likely be announced early Friday morning. The outcome of this election is likely to shake things up for both the GBP and its rival currencies. Investors will be hoping for a Tory majority, but with YouGov polls suggesting a hung parliament may be on the cards, the answer is certainly not clear as to who will come out triumphant.
If you are in the process of buying or selling Australian dollars and would like a free quote then contact me directly, Tom Holian, I look forward to hearing from you. [email protected]