In the aftermath of Donald Trump’s extraordinary victory in the US Election, the Pound has been unsettled against the Australian Dollar, with a lack of UK developments compounding the issue.
In Australia, the AUD has been on a rollercoaster journey, mainly due to commodity price fluctuations and future fears about interactions with the US.
Pound Australian Dollar Exchange Rate Highly Volatile after Trump Election Win
The Pound to Australian Dollar exchange rate has been extremely turbulent over the past few days, mainly due to the external influence of the US Election result.
The Australian Dollar initially jumped against the Pound when it became clear that Trump would win, though after he offered a surprisingly restrained victory speech, the US Dollar rallied and pushed down the AUD.
At its low, the GBP AUD exchange rate fell to 1.59, while the over 1-month high of 1.65 was seen when confidence started draining from the Australian Dollar.
GBP/AUD Rate Predicted to Advance if UK-US Trade Deal Materialises
While it has been rocked violently by the US Election outcome, the Pound could yet benefit from Donald Trump becoming President next year.
While the UK still has yet to leave the EU, MPs and trade figures have already been searching around for possible deals to be struck after Brexit, given that single market access is not assured.
While not a direct source, in the hours before the election result was announced, Trump’s Trade Advisor Dan DiMicco stated that the UK would be ‘front of the queue’ when it came to future trade negotiations.
Should this prove accurate, the Pound may well rally against the AUD, given that at least one assured trade link would be established in an otherwise uncertain future.
Australian Dollar Predicted to Hold Gains if Iron Ore Demand Remains High
Looking ahead, future movement for the Australian Dollar is expected to come from commodity prices, and how US developments impact these.
It has already been shown that precious metals such as gold can be boosted in value by concerning statements from the President-Elect. Given that Trump will likely be in office for four years, this only points to further volatility for commodity costs in Australia.
More specifically, Trump could also weaken the AUD if he decides to cut off trade with Australia or impose tariffs on Australian imports, as he has previously spoken highly of protectionism.
Finally, iron ore costs, primarily influenced by China, are expected to trigger further movement, especially if they rise further on continued demand.
Recent Interbank Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.62 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.61.
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