Aussie slumps to four-month low against British pound

The Aussie dollar has tumbled to a four-month low against the British pound after UK Prime Minister Theresa May called a snap election to seek a stronger mandate to negotiate her country’s exit from the European Union.

Overnight the Aussie dropped below 60p to 58.85p, the lowest since December.

The British pound gained 2.3 per cent to $US1.2344 after Ms May called a general election for June 8, accusing opposition parties of threatening her administration’s preparations for Brexit.

Sterling stole centre stage in Asian markets today amid speculation Britain’s surprise decision to call a snap election could ultimately deliver a more market-friendly outcome in its divorce from the European Union.

“We expect that the PM’s gamble is likely to buy her more time as well as room for manoeuvre in the Brexit negotiations as she will depend less on fringe groups in her own party,” said Citi’s chief global political strategist, Tina Fordham.

“That may reduce the risk of a negotiation failure and thus ’chaotic Brexit’, but also of the UK remaining in the Single Market in the long-term or even reversing the decision to leave the EU.”

Sterling was just off a six-month top against the US dollar having surged when British Prime Minister Theresa May called an early general election for June 8, seeking to strengthen her party’s majority ahead of Brexit negotiations.