GBP/AUD Exchange Rate Improves as Polls Indicate Tory Majority
The Pound Australian Dollar (GBP/AUD) exchange rate rose today, with the pairing currently trading around AU$ 1.924 following the Survation’s opinion polls’ suggestion of a Conservative victory on the 12th December general election.
The poll showed that the Tories were ahead of the Labour Party in a 14-percentage point lead, ensuring a high probability that the Conservatives will win a majority this week.
With markets preferring a Conservative victory, due to their promises to resolve Brexit uncertainty and engender enterprise-friendly policies, this has provided some uplift for the Pound today.
However, markets remain cautious over the remaining possibility of a hung parliament this week, with the opinion polls results being treated with a degree of scepticism.
Elsa Lignos, Global Head of Strategy at RBC Capital Markets, commented:
‘[T]here is a historically high number of undecided voters which could affect as many as 80 marginal seats. We will be neutral GBP going into Thursday and look to trade the outcome.’
AUD/GBP Exchange Rate Sinks as Chinese Exports Fall for Fourth Month in a Row
The Australian Dollar (AUD) struggled today after Chinese exports fell for their fourth consecutive month as US-China trade uncertainties weigh on China’s economy.
Jeffrey Halley, the Senior Market Analyst at OANDA, commented:
‘China is clearly not immune to either the U.S. trade tariffs, or the lingering slowdown in the broader global economy.’
With China being Australia’s largest trading partner, this has weighed on market confidence in the risk-averse ‘Aussie’ today.
Australian Dollar (AUD) traders are also feeling increasingly jittery over the increasing prospect of a rate cut from the Reserve Bank of Australia (RBA) as early as February.
This follows comment from Philip Lowe, the Governor of the RBA, in which he said:
‘The board agreed that due to both global and domestic factors, it was reasonable to expect that an extended period of low-interest rates will be required in Australia to reach full employment and achieve the inflation target.’
GBP/AUD Outlook: UK Political Developments in Focus
‘Aussie’ investors will be looking ahead to tomorrow’s release of the Australian House Price Index for the third quarter, which is expected to rise from -0.7% to 0.2%.
Tomorrow will also see the release of Australia’s Mod-Year Economist at Fiscal Outlook report, with any indications of a dovish turn from the Australian government regarding its fiscal outlook being AUD-negative.
Sterling traders will be awaiting tomorrow’s publication of the UK GDP figure for October, which is expected to rise from -0.1% to 0.1%.
Tomorrow will also see the release of the industrial and manufacturing production figure for October, with any indications of improvement likely buoying market confidence in the British economy and boosting the Pound.
UK political developments will remain in focus ahead of Thursday’s general election this week, with any signs of the Labour Party rising likely weakening the Pound on heightened political volatility.
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