Resignations in the UK and the impact of the Brexit deal on the Pound vs the Australian Dollar

In what has been a very volatile week so far we have just had the news that UK Brexit Secretary Dominic Raab has handed in his resignation.

Sterling has fallen dramatically against the Australian Dollar into the 1.76 levels after trading above 1.80 earlier this month.

The Brexit deal that has been accepted has caused a huge amount of discontent across the markets and this has been reflected in the value of the Pound.

Last night Australian unemployment figures were released and the data came out better than expected with the unemployment level coming out at 5%.

However, the housing market is also still a concern in Australia as lending standards have been tightening owing to the advice provided by the Royal Commission in Australia.

With previous checks made by the banks not checking incomes properly as well as not working out affordability correctly the banks now appear to be struggling with payments.

Banking giant UBS has also claimed that the Australian property market could fall by as much as 30% and in the last five years alone the average property price in Perth has fallen by 13% and with Sydney and Melbourne also showing signs of a slowdown then I think there could be some truth in this claim.

However, ultimately at least in the short term the value of the Pound against the Australian Dollar will be dominated by what will happen with the issue of Brexit.

Some reports are that we could even be seeing a vote of no confidence in Theresa May and this is likely to bring further problems to the UK as it would create even further uncertainty with the political situation in the UK and that will typically impact negatively on the value of the Pound vs the Australian Dollar.

Prime Minister Theresa May is due to address the House of Commons at 10:30am in the UK and with Raab leaving this highlights the lack of support that May now has with this current Brexit deal.

Raab’s main issue was his problems with the Irish backstop arrangement and that he could not support the deal.

With further political uncertainty I think we could see further losses ahead for the Pound vs the Australian Dollar. Feel free to get in touch using the form below if you’d like to discuss any of the above, or have another question about the factors that are likely to impact your currency exchange. I’ll be happy to get in touch personally.

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