GBP/AUD Exchange Rate Wavers as Boris Johnson Resigns
The Pound Australian Dollar (GBP/AUD) exchange rate is fluctuating today following Boris Johnson resignation as Prime Minister.
At time of writing the GBP/AUD exchange rate is around $1.75, relatively unchanged from this morning’s opening rate.
Pound (GBP) Fluctuates as Political Uncertainty Not Quite Over
The Pound (GBP) is wavering today as Prime Minister Boris Johnson admits defeat and resigns from his post. In the wake of more than 50 ministers resigning in protest over the numerous scandals that have plagued Johnson’s reign, he had no choice but to step aside.
In a statement delivered in front of 10 Downing Street, Johnson announced his resignation and conceded that the Conservative party needed a new leader to continue.
However, he maintains he will stay on until a new leader is found, much to the anger of many Tory MPs. Despite initially finding strength, the Pound wavered as investors soon realised the political uncertainty is far from over.
The next week or two could prove to be a turbulent one for both the UK and the Pound as Conservatives will be clamouring to elect a successor. If the political turmoil persists, the Pound could be under further pressure.
Australian Dollar (AUD) to Gather Strength on Hawkish RBA?
The Australian Dollar (AUD) could see gains as investors are increasingly convinced of a further 50bps rate hike in August, a third consecutive hike for the central bank.
The Reserve Bank of Australia (RBA) raised its interest rates to 1.35% following its July meeting on Thursday, a level not seen since May 2019.
Further boosting the ‘Aussie’ is a record trade surplus as exports jumped up by 9.5% from last month, including the recovery of iron ore prices, one of Australia’s key exports. A seemingly strong Australian economy supports hawkish RBA rate hike bets.
However, capping any further gains could be the news out of China that Shanghai is widely expected to be locked down as 32 new cases were reported by the city’s Health Commission. Any further slowdown to China’s economy is likely to weigh heavily on AUD, a proxy currency to China.
Meanwhile, growing fears of a global recession continue to concern investors. Risk-sensitive currencies, such as the ‘Aussie’, could be exposed to downward pressure as safe-haven flows persist.