Pound to Australian Dollar (GBP/AUD) Exchange Rate Climbing as Scotland Votes ‘No’
The Pound to Australian Dollar (GBP/AUD) exchange rate has been trending higher on Friday and is presently trading at 1.8371. Sterling has so far attained session highs of 1.8467, with the possibility of firming further before the close of the European session. The Pound’s gain has been enabled by the announcement that the Scotland will remain within the UK.
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The Scottish referendum has caused ripples in the market lately as investors remained uncertain on the outcome of the vote. Scottish citizens flocked in their millions on Thursday to decide whether their nation would remain within the UK and continue with the 307 year old union.
UK Prime Minister David Cameron said he was ‘delighted’ in his statement, suggesting that the time had come for ‘our United Kingdom to come together and to move forward.’
Scotland’s First Minister who headed up the ‘Yes’ party admitted defeat, commenting: ‘It is important to say that our referendum was an agreed and consented process and Scotland has by a majority decided not at this stage to become an independent country. I accept that verdict of the people and I call on all of Scotland to follow suit in accepting the democratic verdict of the people of Scotland.’
However, many questions have been raised for discussion during the referendum, including those of political adjustment. With the offer of a devolved parliament for Scotland, Cameron has suggested that all areas of the UK must be enhanced with a new agreement.
The Pound to Australian Dollar exchange rate will be dependent on the effect of the referendum as neither nation is scheduled to release any other domestic data this week.
The Australian Dollar has remained stubbornly high in the last few months, repeatedly creeping up to the 94 US cents threshold. However, poor domestic data and statements from the Reserve Bank of Australia (RBA) have seen the ‘Aussie’ retreat lower. Despite this, the ‘Aussie’ has remained a favourite with its repetitive gaining streaks.
Friday, however, has seen economists suggest that the ‘Aussie’ could fall as low as 73 US cents. With the speculation that interest rate increases could occur in the US affecting both the Pound and the Australian Dollar of late, economists noted that this week’s Federal Reserve meeting could place heavy pressure on Australia’s commodity currency.
Economists suggested: ‘Most leading indicators suggest that the US economy is strengthening relative to other countries, while diverging rates policies ought to be US-Dollar [USD] supportive.’
Furthermore the Australian Dollar has seen losses as economic growth in its largest trading partner, China, has slowed.. Furthermore, Australia’s largest commodity, iron ore, has tumbled in value which hasn’t done the ‘Aussie’ any favours.
Next week will be a relatively quiet week for both the UK and Australia by way of data publications, which may allow only minimal movement between the currency pairing. However, the ongoing effect of the Scottish referendum and any other political developments could inspire movement in the GBP to AUD exchange rate.