Sterling v Australian Dollar Update – 9th March 2016
Sterling v Australian Dollar Update
Sterling continues to slide as political and economic uncertainty continues
It feels as though Sterling has only really started falling in the last two weeks, ever since the announcement of a referendum by David Cameron on Britain’s membership of the EU however, Sterling has been falling steadily since the middle of December. Unfortunately for those selling Sterling and looking to purchase Australian Dollars, political pressures don’t show many signs of abating as the “Leave” and “Stay” campaigns start to gather momentum.
The surprising size of the ‘Leave’ campaign lead by Boris Johnson following Cameron’s announcement of an EU Deal being agreed was the catalyst for Sterling to have it’s worst one day performance for nearly three years. Nobody likes uncertainty, the currency markets certainly don’t and they didn’t react well to potentially substantial changes to a country’s economic situation, as well as the uncertainty which follows.
The current situation that Sterling finds itself is similar to the weakness Sterling experienced during the Scottish Referendum, and in this instance, we still have months until the country goes to the Polls. This weekend’s resignation by the Head of the British Chambers of Commerce over his support for “Brexit” and the that his support is “likely to cause confusion” is yet another obstacle for Sterling to clear and another reason for uncertain investors to sell Sterling.
The Australian Dollar on the other hand continued to make gains last week as commodity prices rose once more, boosting confidence in Australia’s mineral industry to run more sustainable profits. With greater dependence on revenue in our economy from the financial services industry rather than commodities, the slides in global stock markets in recent months are expected to show reduced growth for the second month in a row for the UK. The UK GDP figures for Q4 2015, as well as industrial and manufacturing production data are expected to evidence the expected slowdown this week.
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