Volatility Forecast for Pound Sterling Australian Dollar Exchange Rate as Turnbull Becomes PM

September 15, 2015 - Written by John Cameron

STORY LINK Volatility Forecast for Pound Sterling Australian Dollar Exchange Rate as Turnbull Becomes PM

GBP/AUD Exchange Rate Lower as Australia Gets a New Prime Minister

Yesterday afternoon’s news that Australia will have its fourth new Prime Minister since 2013 has bolstered support for the Australian Dollar (currency : AUD), sending the Pound Sterling Aussie Dollar exchange rate down into the 2.1500s GBP AUD.

Malcolm Turnbull was chosen as the new leader of the Liberal Party in Australia after an emergency leadership vote amongst the party’s parliamentarians. Turnbull defeated erstwhile Prime Minister Tony Abbott by 54 votes to 44 and the development proved popular with the markets. The motives behind the MPs’ decision was clear; Steve Ciobo, the member for Queensland, stated yesterday that, ‘the party room overwhelmingly wants to get on with the job that we were elected to do which is to defeat the Australian Labour Party, to provide strong economic stewardship for Australia, and to generate jobs for the Australian people.’ It was clear that the majority of Liberal MPs felt that a vote in favour of Abbot continuing as leader of the party and of their nation would have been tantamount to the proverbial turkeys voting for Christmas.

Turnbull Could Support Australian Economy, Drive Australian Dollar (AUD) Conversion Rate Higher

Turnbull was quick to paint himself as a moderniser, commenting directly after his victory that, Australians ‘have to recognise that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it’. Investors’ initial reaction to the news suggests that they believe Turnbull is the man to move the Australian economy forward.

Australian Dollar Exchange Rate Forecast: GBP/AUD Volatile on Chinese Data

However, the newsflow for the Australian Dollar since last Friday’s market shut down has been very far from being exclusively Aussie positive. The early hours of Sunday morning brought the publication of a significantly weaker than anticipated set of Chinese Industrial Production data for August. The official figures revealed that factory output in the world’s second largest economy grew at a below-expectations 6.1% last month versus an expected 6.4%. The news caused analysts to forecast that the sharp deterioration in Chinese economic statistics may not have worked its way through just yet.

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