The Pound Australian Dollar (GBP AUD) exchange rate fluctuated this morning following a surprise call for a snap election from Prime Minister Theresa May.
Sterling initially plummeted almost a cent against the Australian Dollar ahead of the PM’s statement as some investors speculated the May might be stepping down, but the pairing quickly recovered its losses as she announced that she wishes to hold a general election on the 8th of June.
May said that she has called for an general election to ensure that Britain has the ‘certainty, stability and strong leadership’ required to negotiate the UK’s split from the EU as she accused Labour, the Lib Dems and the SNP of all seeking to frustrate the Brexit process.
In her Statement Theresa May said;
‘At this moment of enormous national significance there should be unity here in Westminster, but instead there is division. The country is coming together, but Westminster is not.’
Labour leader Jeremy Corbyn welcomed the call for an early election as he said it would give the electorate a chance to vote for ‘a government that will put the interests of the majority first’.
Opinion polls currently suggest that the Conservatives hold around 42% of the vote against Labour’s 27%, which would be enough to give the PM quire a substantial majority and the mandate to pursue her plans for a ‘hard Brexit’.
Meanwhile the Australian Dollar was weakened overnight on Monday by the release of the latest monetary policy minutes from the Reserve Bank of Australia (RBA).
While largely in keeping with the Bank’s neutral outlook for future monetary policy, investors were worried by the addition of a short paragraph at the end which suggested that Australia’s Labour and Housing markets ‘warranted careful monitoring over coming months’ leading some economists to speculate over the possibility of a rate cut from the RBA within the foreseeable future.
Looking ahead the GBP AUD may retreat on Wednesday if Westpac Leading Index of Economic Activity paints a positive outlook for the Australian economy.
Meanwhile the Pound may be left a little directionless until later in the week thanks to a lull in domestic data until Friday’s Retail Sales figures.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.67 and the AUD GBP exchange rate was trending around 0.59.