The Pound Australian Dollar exchange rate has dropped sharply this week, though could well stage a recovery if an approaching Government appeal to the recent High Court ruling falls through.
The Australian Dollar’s latest rally has come at a concerning time, when the nation may face a potentially damaging cut to its credit rating.
Pound Australian Dollar Exchange Rate Slides after Overpowering US Election Development
The Pound has dropped against the Australian Dollar at the start of the week and been in low demand elsewhere, owing partly to an in-demand US Dollar lowering the appeal of Sterling.
Domestic news has been little better for the UK, with the November 3rd historic High Court decision on Article 50 already finding opposition from the Government and other parties.
The Australian Dollar has been conversely aided by the news that Hillary Clinton’s odds of becoming President have strengthened again, after the FBI cleared her of wrongdoing on the weekend.
Under a stability-linked Clinton administration, the US trade status quo is expected to remain intact, which will preserve the US as a valuable trading partner for Australian exporters.
Pound Sterling Predicted to Rise if Parliament Gets Article 50 Vote
In the aftermath of the High Court’s Article 50 decision, the Government almost immediately lodged an appeal with the Supreme Court. The objection was to the High Court’s terms, which were that the article could not be triggered automatically, instead requiring a vote in Parliament.
Given that the Pound rallied after the Government was blocked, a dismissal of the current appeal will likely trigger further gains for Sterling, given that such an action would further raise hopes of a ‘soft’ Brexit rather than a potentially ruinous ‘Hard’ one.
Australian Dollar Shock Possible if S&P Cut AU Credit Rating
The Australian Dollar’s latest gains may come crashing down in the future, based on a forecast made by Head of Australian Fixed Income Stephen Miller of Blackrock.
The company has made the concerning prediction that as soon as December, Standard and Poor’s could cut Australia’s current AAA credit rating.
Losing the AAA rating could lessen lending to the Australian government. Commenting on how this could happen, Miller said;
‘Australian governments have been serial under-deliverers. If we persist with that, we might see the patience of the rating agencies tested to breaking point. There have been some positive developments in the last six months, but I think they’ve been few and far between’.
Recent Interbank Exchange Rates
At the time of writing, the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.61 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.62.
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