The Pound has appreciated against the Australian Dollar today, but could fall to fresh lows when the November budget comes to light.
On the other side, Australian Dollar gains are possible depending on future Reserve Bank of Australia (RBA) activity.
Pound Faces Turbulence on November Budget Announcement
The Pound could plummet against the Australian Dollar on the coming Wednesday, when Chancellor Philip Hammond delivers the November budget.
The widely-anticipated event will see the Chancellor lay out his spending plans for the year ahead, which could see a sea change in fiscal policy.
The Conservatives have acquired a certain notoriety for their adherence to austerity measures, which has led some to speculate that a tipping point has been reached.
Summing up the issues faced in the budget have been Financial Times economists George Parker and Chris Giles. Both believe the pressure is on to deliver an acceptable budget;
‘Next week’s Budget has become the battlefield for all the government’s mounting problems: the ferocious cabinet divisions over Brexit, a weakening economic outlook and the prime minister’s fragile authority.
Any controversial Budget measure can be voted down in the Commons if fewer than 10 Tory MPs side with the Labour opposition; suffering such a defeat would be calamitous’.
It remains to be seen if Hammond can pull any budgetary rabbits out of his hat, but the Pound may start to move erratically in the run-up to the announcement itself.
Australian Dollar Volatility ahead on Last RBA Rate Decision of 2017
Looking ahead, the Australian Dollar could turn turbulent against the Pound in early December, when a pair of high-impact economic events will take place.
On December 5th, the Reserve Bank of Australia (RBA) will make its last interest rate decision of the year. Additionally, Australian Q3 GDP growth rate stats will also be announced.
In the former case, the RBA is not predicted to adjust interest rates from 1.5% but could still inspire Australian Dollar gains through other elements.
Specifically, if policymakers suggest that Australian interest rates could rise in 2018 then the Australian Dollar could rally.
In recent months, RBA officials have identified a few factors holding them back from raising interest rates, including low wage growth despite low unemployment.
With Australian GDP, traders predict a rise in the year-on-year reading for Q3, along with a slowdown from 0.8% to 0.6% on the month.
The yearly figure is usually the more impactful of the two, so could inspire significant AUD gains on the day.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trading at 1.7370 and the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.5755.
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