Pound traders are keeping an eye on November’s budget announcement for future movement, while the Australian Dollar might be impacted by election issues.
Will Chancellor Hammond Boost GBP with Beneficial Budget Statement?
As well as a key interest rate decision in early November, GBP traders are also looking ahead to late November’s budget announcement.
This will be Chancellor Philip Hammond’s Autumn Budget, which could present some difficult decisions.
It is widely expected that Hammond will continue to push for the UK labouring under austerity measures, even though these might be doing more harm than good.
A recent statement from the Institute for Fiscal Studies (IFS) has warned of the limits of austerity policies;
‘Seven years of cuts have served merely to return public spending to its pre-crisis level as a share of national income.
Overall borrowing is now only slightly greater than it was in 2007–08, with both receipts and spending slightly above their pre-crisis shares of national income’.
Musing Hammond’s possible options has been Carl Emmerson, IFS Deputy Director;
‘Does he allow higher borrowing to persist, does he add to that with more spending, or does he try to offset that with greater taxes?’.
If Hammond delivers a so-so budget statement, heavy on austerity and light on innovation, the Pound could tumble on November 22nd.
Australian Dollar could Crash if Nationality Scandal Weakens Government
An ongoing political incident might affect the Australian Dollar’s trading value in the future, depending on how it plays out.
The problem is that Barnaby Joyce, formerly AU Deputy Prime Minister, has been disqualified because he was elected while holding dual-citizenship.
Joyce has since renounced the New Zealand half of his nationality and could be re-elected in a by-election, but if he isn’t then there could be turbulence ahead.
As Deputy Leader in the Liberal-National Coalition, Joyce provided the government with its one-seat majority. If he fails to reclaim his seat, this would leave Prime Minister Malcolm Turnbull leading a minority government.
While still legally viable, this would make the government’s job harder because of greater struggles to pass laws or propose reforms.
If a minority government does end up being formed, the Australian Dollar could plummet against the Pound.
Recent Interbank GBP AUD Exchange Rates
At the time of writing, the Pound to Australian Dollar (GBP AUD) exchange rate was trading at 1.7156 and the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.5827.
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