AUDGBP Makes Back Some Lost Ground From Last Week

AUD GBP Mixed as Central Banks Feel the Heat

The start of the week has seen the AUDGBP exchange rate make up a little bit of the ground. Last week the Aussie dollar lost nearly 3% from the start of the week to the end, however some of that has been reclaimed. The strength Sterling gained was really from the positive attitude towards Brexit as it appeared that once again there was slightly more prospect of a deal being achieved. However as usual only time will really tell if that is the case.

The UK negotiation team has set a deadline of the 15th October to agree a deal of sorts, or they will start to prepare for a no deal Brexit and the UK moving onto World Trade Organization (WTO) terms with the EU. The deadline that has been set could well cause volatility as we approach this point, as after that the likelihood of a deal decreases. Timing is key, as in order to get a deal through both the UK and the EU Parliaments there needs to be plenty of time. Sterling should receive a boost if there was to be a deal, even if it is only something in principle or name as the no deal Brexit prospect will be diminished. The avoidance of any cliff edge moment is key and a basic deal will mean that has been avoided.

The Australian way of life has been slowly returning back to normal once again following a spate of second lockdowns. There is a real concern of the size of the deficit being created with nearly $200bn AUD thought to be the fall out. However a report written by Deloitte has suggested that the Government may need to do more in order to effectively help business and people to get through the Pandemic. At the end of this financial year unemployment is expected to be near 8% with 2022-2023 seeing the rate fall back below 7%. The Australian Government has accepted that any austerity measures in order to recoup back the deficit will need to be put on hold for the foreseeable future suggesting unemployment should be back below 6% before they try to clear the deficit.

Australian Government Set to Announce Domestic and Regional Flights

It’s no secret that it may be some years before the country returns to that level of employment so it could be a while before austerity measures are brought into play. The Government is also set to announce that they will underwrite domestic and regional flights around the country. This should help to boost tourism and allow businesses to return back to previous levels. The country is so large that there is very little you can’t do within the country from a tourism perspective, this has been acknowledged by the Government and as the international market has disappeared the local and national tourism could become significant.

The air industry flights will be available and airlines will once again be offering jobs as a result of this update. The Australian Government announced $500m for regional tourism and infrastructure projects which should all add to jobs and growth within the economy. If the economy can get back to spending and doing normal things once again that could have a big impact on Gross Domestic Product figures. Positive data could help to lift the interest rate however it is unlikely that it would happen for some time. A increase in the interest rate would likely help the Aussie to strengthen but the prospect of this happening anytime soon is next to none.

More likely in the immediate future, the fate of Brexit will dictate which way the AUDGBP rate moves and we should have some clarity on that in the next few weeks. If you’re looking to complete a AUDGBP transfer then it’s worth considering how much risk you’re willing to take. In the last few months the Aussie dollar has made major gains against Sterling through the pandemic and the rate still sits very close to that level. Depending what happens in the middle of October that may or may not be the case in the near future.

If you believe the UK and EU will agree a deal then it’s worth moving before that point, alternatively if you think a no deal Brexit is on the cards holding on might be the best option for you. Get in touch using the form below to know more about the potential implications of Brexit on AUDGBP rates using the form below. I’ll be happy to respond personally.