In recent weeks the ongoing Brexit saga has been putting extreme pressure on the Pound against the Australian Dollar and GBPAUD has dropped. Over the last 8 weeks exchange rates have dropped from 1.87 to 1.7455. To put the fall into monetary value, a £200,000 transfer into Australian Dollars now achieves clients $24,900 AUD less compared to the high point.
|Currency Pair||% Change in 30 days||Difference on £200,000|
This week UK Prime Minister Theresa May will continue the debate in the House of Commons and hope to persuade MPs to back her Brexit plan. Yesterday the House voted in favour of the Government publishing the legal advice text which caused the Pound to fall against the Australian Dollar. The reason behing this Sterling weakness is that it’s likely this text is going to state that the UK could be forced to remain part of the customs union indefinately and this will put MPs off voting in favour of the MP's plan.
December 11th is judgement day for the Prime Minister. If she fails to get the deal over the line I expect this will be the final nail in the coffin, and she will then either be ousted or will even choose to resign herself. If this was to happen, further uncertainty will creep into Sterling exchange rates and I expect GBPAUD will fall below 1.70.
It’s not all good news for clients selling Australian Dollars to buy Pounds as the Australian housing market remains a key concern for the Australian Dollar. It’s been heavily noted within the media that Australian banks have been forced to tighten lending standards due to the amount of household debt.
Reports in recent weeks are suggesting that the Banking Royal Commission next year are set to publish further findings that could force lending standards to be tightened even further which could cause the Australian housing market to crash by 30% according to UBS.
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