The results of the Referendum today could impact GBPAUD exchange rates as much as 15 cents either way. Due to today's major event, you are advised to review the live exchange rates regularly for currency changes.
GBPAUD rates have swung by over 20 cents in the last two months as investors scramble to make sense of the UK Referendum and take positions on the ever volatile Australian dollar. The main driver has been the pound but as the Australian currency is used by speculators because of its high interest rates, it has been subject to extra inflows (and outflows) of capital as global markets are so wobbly ahead of the UK vote.
Whilst Australia is arguably not as directly impacted by the vote there will be global ramifications from a Leave vote and as a perceived riskier currency the Aussie does react to global events. In times of uncertainty the Aussie can weaken as investors are fearful to hold the currency, in times of certainty investors are more confident to hold the high yielding Aussie.
A Remain vote should see the pound rally which would easily see GBPAUD back over 2, I would not rule out a level of 2.10. Leave would I feel take us right back below 1.90, perhaps retesting the 1.82 low seen two months ago and maybe lower still. The Aussie may individually react in the form above with a Leave vote signally global uncertainty which may weaken the Aussie whilst a Remain vote signals global confidence possibly helping the Aussie find favour. I think the main driver will be the pound but these trends could manifest in the aftermath or in unexpected sudden spikes as investors adjust individual positions to take advantage of any perceived opportunities.
With so much attention on the UK it is easy to forget the Australian election scheduled on the 2nd July. The vote there is also very close with Labour now at 51% versus the Liberal Coalition at 49% making it very difficult to call which should see the Australian dollar remain weak up to the vote. This means next week could present a unique opportunity to buy Australian dollars following a Remain vote on the back of Australian election uncertainty, could rates top the 2.10 level?
Any spike might be well short lived since whatever the outcome of the election after the result over the weekend of the 2nd and 3rd July the Australian dollar might have regained some strength entering the following week.The next ten days could present some extremely interesting opportunities to buy and sell Australian dollars, with so much at stake leaving everything to the last minute and failing to prepare could prove costly. We will be open from 7 am UK time today, tomorrow and next week to handle trades with our Australian clients so please get in touch to make sure you have made plans ahead of these key decisions.
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