The Pound is in low demand against the Australian Dollar during trading today, on account of serious concerns voiced among City of London financiers about how the UK’s exit from the EU will affect them.
The Australian Dollar has been destabilised overall, due to significant levels of unrest in the US political system and Chinese economic forecasts.
Last week, the Pound progressively worsened against the Australian Dollar in trading, starting off in the region of 1.73 and closing the week at a low of 1.69 on Friday.
Pound Sterling Update: Clash between ‘Hard’ and ‘Soft Brexit’ Panics Investors
The week’s trading has started off on a low note for the Pound, which has largely flopped against its peers due to widespread concerns that the UK’s exit from the EU may deprive the City of London of its financial might.
The prime concern in this case is between ‘hard’ and ‘soft’ exits from the EU, with the former favouring immediacy and drastic actions to achieve immigration control, and the latter seeing a more long-term, measured approach, which could see single market access maintained at the cost of some of the original objectives of the ‘Out’ campaign during the Referendum.
Expressing his concern about the situation was Barclays Chairman John MacFarlane, who said;
‘The danger of hard talk now is that it increases uncertainty, reduces confidence and will result in businesses triggering their exit plans from the UK’.
Australian Dollar Unsettled by China Fears and US Election Debate
The ‘Aussie’ has fluctuated against peers at the start of the week, on account of supportive news from the US coming up against recurrent concerns that major trade partner China may be on the cusp of an economic slowdown.
In the former case, the upcoming US presidential election debate is set to be a historic one, with Donald Trump and Hillary Clinton debating live against each other for the first time.
Although some speculators have predicted that a Clinton victory is likely, the risk of Trump rising in the polls after the event has kept investors on edge and the US Dollar down, thus supporting the Australian Dollar.
Less helpfully, a former International Monetary Fund (IMF) official, Ken Rogoff, has warned that a Chinese economic slowdown may be taking place behind the official figures, which would mean that demand for Australian mining products is likely to decrease in the future.
This Week’s GBP/AUD Exchange Rate Forecast
For the current week, Pound Sterling to Australian Dollar exchange rate movement could take place on a pair of Bank of England (BoE) official speeches, as well as from Friday’s UK confidence and growth rate figures.
With the Australian Dollar, movement may occur on the incoming US election debate result, as well as Wednesday’s Reserve Bank of Australia (RBA) speech and Friday’s new home sales figure.