The GBP reached new highs this week following the outcome of the General Election. With a Tory win in the bag, the UK now has its future decided and the market is given an insight into how the economy may be shaping up in the coming months and years. For the AUD, disappointing data saw the currency’s confidence decline.
GBP Rises Following a Win for the Conservatives
The General Election which took place on Thursday saw the triumph of the Conservative party. Its leader Boris Johnson has received the vote of confidence in taking the country through Brexit, with the market backing him. Investors were looking for clarity from the election win, with the Tories in power the path was clear-cut. They had feared that should Labour make a surprising comeback; the future of the UK’s economy would once again be unclear and lead to more uncertainty. This has previously held the GBP back since Brexit was voted upon. But as the winner was announced, the GBP rose up and secured itself amongst the highest performing currencies across the world.
AUD Rallies on US-China Progress but Could Be Held Back by RBA Minutes
AUD rallied last week following the news that the US and China had agreed a deal after months of deliberation. With this deal being made and US tariffs on China being cancelled the global economy felt an uplift which had a knock-on effect to the China-sensitive AUD. However, the RBA could sabotage these gains this week. Tuesday will see the RBA’s meeting minutes released. The AUD could slide against the GBP should the tone be dovish from the RBA. If the RBA focuses on the downside risks to the economy, it is likely this will be the outcome. Later in to the week the AUD could edge up against the GBP should employment figures improves on the previous month.
GBP Could Slide Despite Election Outcome Following Bank of England (BoE) Meeting
The BoE is set to meet on Thursday to discuss their monetary policy rates. The pairing of the GBP/AUD could slide following the decision which is agreed upon in this meeting. Despite the banks decision looking likely to leave the interest rate untouched, there is a chance that BoE governor Mark Carney could focus on the headwinds to the British economy and in doing so this could cause the GBP/AUD exchange rate to slide.
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