Why has the pound dropped in value against the Australian dollar?

This week the pound has plummeted against the Australian dollar from 1.6837 to 1.6350. To put this into monetary terms a 200,000 Australian dollar purchase is now £3,538 more expensive. There are three main reasons for the decline.

Firstly, UK Prime Minister confirmed to Sky News last weekend that she plans to stick to her March deadline. She tried to be clever with her words however hinted she plans to control immigration which means leaving the single market is inevitable.

Secondly with less than 14 days until Donald Trump becomes President speculators appeared to have sold off US dollars as they are questioning how he will handle US foreign policy. Claims have also emerged that the Russians had material to black mail Mr Trump. He has dismissed all claims however USD/AUD exchange rates have dropped this week which shows a selloff has occurred.

Thirdly, the Supreme Court decision to whether UK Prime Minister Theresa May has the power to invoke Article 50 on her own is looming. Reports are suggesting its closer than one first thought therefore this is causing further volatility for the pound.

Is it a good time to sell Australian dollars?

With exchange rates falling 5 cents in 3 days, short term Australian dollar sellers may wish to take advantage of the spike, as I wouldn’t be surprised to see USD/AUD trades reversed once the Trump story settles. Furthermore, the pound could also gain a well needed spike if the national newspapers are correct and Theresa May needs to attain Parliamentary approval before invoking Article 50.

Have you heard about our limit order contract?

As GBP/AUD exchange rates are fluctuating between the low 1.60s and low 1.70s, a popular contract option for traders at present is the limit order. This allows clients to set a rate of exchange they want to achieve and when that rate is available we have the tools to be able to buy the currency immediately without having to speak with the client. As our regular readers are aware rates of exchange can become available for the matter of minutes and at that time they are unavailable. Therefore, by placing an order they can achieve the rate they are after without having to constantly watch the fluctuating rates. For more information in regards to limit order contact the trading floor.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me at drl@currencies.co.uk.


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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.