GBP/AUD Drops to 1.95
Monday saw the pound drop to its lowest level in 9 months against the Australian dollar, suffering its worst daily loss in 6 years. The GBP/AUD had been trading comfortably above $2 for most of last year but has recently fallen below this key level, currently sitting at $1.95. The graph below shows GBP/AUD movement over the last 7 days.
GBP/AUD exchange rate graph
The pound has been struggling so far this year as concern over the outcome of the EU referendum has weighed heavily on the UK currency. The pounds losses yesterday came off the back of the announcement from the Mayor of London, Boris Johnson, that he was believed Britain would be better off outside of the European Union, raising the odds that Britain may well leave the economic bloc when votes are cast on June 23rd. The markets don’t like uncertainty and the pound has suffered as a result.
Michael Hewson, chief analyst at CMC markets has voiced his concerns:
“There’s still no guarantee that the UK will exit the European Union, but I think what it has done is it has highlighted the uncertainty not only here in the UK about the future of the EU, because the euro has also taken a bit of a hit, but also in the global economy as a whole,” he said.
The pound’s recent performance is reminiscent of the build-up to the Scottish referendum in 2014 and the general election last year. Against a basket of currencies, the pound dropped to its lowest level in 7 years yesterday, falling significantly against most of its major counterparts.
On the other side of the GBP/AUD cross, the Australian dollar has actually been performing fairly well, helping push the cross down to a nine-month low. The Aussie currency has benefitted from a surge in the price of oil, iron-ore and other commodities and has benefitted from increased demand for Australian government bonds. It now looks as though the US Federal Reserve are in no hurry to raise interest rates again, making Australian government bonds an attractive alternative, with some of the highest returns of any government bonds in the developed world. The recovery in commodities prices and global stock markets has seen an increase in risk appetite, with investors flocking to the higher yielding Aussie currency.
Do you need to buy or sell Australian dollars?
With the EU referendum looming, and an increase in global economic uncertainty, it is more important than ever to stay in touch with an expert currency broker. If you need to buy or sell Australian dollars, or any other currency, contact me today for a free, no obligation consultation by completing the contact form on the right hand side of the page or call me directly on + 44 1442 892 062.