We may be set for a tricky period for Australian Dollar exchange rates in the coming weeks and months. A look into the reasons behind the Aussie Dollar's struggles in the market report below, with the table displaying the range of exchange rates throughout the past week highlighting the importance of timing your transfer to maximise on your return.
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The Australian Dollar has lost over 2% in value against the pound where as other currencies have remained fairly stable.
The main reasons behind this weakness are similar to that of the Pound’s demise, and that is political uncertainty.
A recent report by Morgan Stanley suggested that ‘Political risks are better priced in GBP but not adequately reflected in the AUD at present’.
New Prime Minister Scott Morrison will be the sixth Prime Minister in the last decade, this volume of leadership change more relates to a Premier league football team so I am sure it isn’t giving investors the greatest of confidence. Morrison merged victorious following a three-way race with affairs minister Peter Dutton and foreign minister Julie Bishop.
Turnbull made the decision not to contest a snap leadership election as it was clear that his ruling Liberal party had withdrawn support.
Political uncertainty can be seen as highly negative for a currency, as investors tend to step away from the currency in question until the dust settles, lowering demand and making it weaker.
We still have tensions rising between Australia and China to take note of too, the relationship between Australia and China has taken a knock recently following a passing of several laws in Canberra aimed at thwarting Chinese influence in domestic affairs, this has not gone down well.
With China being such a key trading partner for Australia heightened tension between China and Australia may also weaken the Australian Dollar in the coming weeks.
Personally, I would not be surprised to see GBP/AUD exchange rates break the 1.80 mark again in the near future, unless there are any major Brexit issues that pop up and knock the Pound once again.
Much like the rest of the world there is very little in terms of economic data to come out from Australia or even China as we head towards the end of the calendar month.
Due to the fact that there is very little economic data that may impact the market, apart from any surprises I feel that the value of the Australian Dollar over the next week or so will likely be based on political news, so expect a lot of market volatility still to come even with very little for the market to feed off of regarding the economy.
If you have Australian Dollars to buy yet do not have time to watch the markets all day every day then it may be prudent to register with us and let us do that for you. Feel free to contact us today on 01494 725353 or email me directly here and we will run you through the quick and simple process of having an account set up which will also give you access to rate alerts and many other handy market tools.
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