The recent Conservative manifesto launch saw the Tories set themselves opposite Labour, by focusing on the UK’s problems rather than its opportunities.
Principally, the spending plan is to cut and save, with the intention of balancing the budget deficit by 2025.
This would be achieved by cutting fuel allowances for wealthier pensioners and including home valuations in social care costs, among other plans. It is generally accepted that many older voters chose ‘Leave’ in the EU Referendum, so these new plans could jeopardise the ‘grey vote’ for the Tories.
If pre-election polls point to a lack of confidence in the Conservatives among older voters, the Pound could weaken as it may mean a lower-than-expected majority.
Anything other than a landslide Conservative victory is expected to unsettle traders and lower GBP demand, so near-election polling stats could shift Sterling.
Future Australian Dollar movement may be decided by the Trans-Pacific Partnership (TPP) agreement. The multinational trade deal was feared lost when the US pulled out earlier this year, but Japanese and New Zealand officials have been working hard to press ahead regardless.
This has been problematic to the various member nations, however, as Australian Trade Minister Steven Ciobo has warned. After it was announced that Japan and New Zealand would try to proceed without US involvement, Ciobo stated;
‘It’s my personal view that taking the TPP forward on the basis that has already been negotiated and agreed to represents the best opportunity for the deal to come into effect. If we start unstitching elements of it, if each country starts bringing to the table issues they’d like to change then logically the conclusion is the deal will become unstitched’.
There are 11 nations remaining in the TPP deal including Japan, Australia and New Zealand, so it is still possible that signatories could unsettle the arrangement with new proposals.
If it looks like smooth sailing to eventually enact the historic trade deal, the Australian Dollar could rally against the Pound. Conversely, any threats to the TPP could plunge the AUD GBP exchange rate to fresh lows.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trading up at 1.7472 and the Australian Dollar to Pound (AUD GBP) exchange rate was trading down at 0.5722.