GBP AUD Exchange Rate Sinks as Second Scottish Referendum on the Cards

February 27, 2017 - Written by John Cameron

STORY LINK GBP AUD Exchange Rate Sinks as Second Scottish Referendum on the Cards

The Pound dropped against the Australian Dollar at the start of trading this morning as Theresa May is reportedly bracing for calls from the Scottish government to hold a second independence referendum.

Pound Australian Dollar (GBP AUD) Tumbles as SNP to Call for IndyRef 2

The Pound Australian Dollar (GBP AUD) exchange rate slid by over a cent this morning as reports suggest that the UK government will face a call in March from SNP leader Nicola Sturgeon to hold a second Scottish independence vote.

Senior government sources told The Times that there are fears that Sturgeon will use Theresa May’s plans to trigger Article 50 next month to stake her claim for a second vote, after Scotland thoroughly rejected Brexit in last year’s EU referendum.

The possibly of Sturgeon calling for a second referendum is likely to disrupt the beginning of the formal Brexit process, potentially weakening the UK government’s position in negotiations and further denting Sterling.
While polls suggest that the Scottish electorate still opposes independence ministers have warned Theresa May that should she agree to the referendum she faces leaving the fate of the union to a ‘coin toss’.

However the PM may seek to temper demand for independence by agreeing to the referendum but on the condition it is held after Brexit, leaving Scotland outside of the EU and increasing the risks of splitting.

Australian Dollar Rises as Investors move to High-Yield Currencies

The Australian Dollar continues to rise this week as markets seek alternatives to other majors such as the Pound, US Dollar and Euro as rising political and economic uncertainty spooks investors.

The US Commodity Futures Trading Commission (CFTC) reported that commodity-correlated currencies have seen long positioning rise to multi-year highs this week as the ‘Aussie’ and its peers are also bolstered by strong commodity trading prices.

While it slipped in the second half of last week iron ore still sits close to the two-year high it struck on Monday and an uptick in Chinese futures during the Asian trading session suggests that iron and other commodities will see growth this week.

Meanwhile AUD was also bolstered by a jump in Company Profits late last year as ABS reports that gross profits leapt from 8.0% to 20.1% in the fourth quarter, largely thanks to the strong performance in the Mining Sector.

GBP AUD Exchange Rate Forecast: UK Consumer Confidence Ahead

The GBP AUD exchange rate may weaken further on Tuesday as Gfk is expected to report a drop in the UK’s latest Consumer Confidence data.

Analysts predict that the uncertainty of Brexit and the pressures of an accelerated inflation rate will led sentiment to fall from -5 to -6 in February.

The Australian Dollar meanwhile may extend its gains if New Home Sales remain strong at the start of the year as forecast.

Current Interbank Exchange Rates

At the time of writing the GBP AUD exchange rate was trending around 1.61 and the AUD GBP exchange rate was trending around 0.61

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