The Pound to Australian Dollar (GBP/AUD) exchange rate has found itself on the rise this morning as unchanged Reserve Bank of Australia (RBA) interest rates and expansion of QE did nothing to support AUD.
At the time of writing the pairing is trading at around AU$1.7981.
Unchanged RBA Interest Rates Cause AUD to Falter
The Australian Dollar found itself struggling this morning after the Reserve Bank of Australia (RBA) chose to leave interest rates unchanged and struck a cautious tone following the policy meeting for February.
As forecast, the RBA kept interest rates on hold at 0.1% for February.
Markets were however caught off guard as the RBA announced that it would be expanding its quantitative easing (QE) programme by AU$100bn a month.
The announcement, which wasn’t expected until March, has caused investors to remain wary of AUD.
Comments from RBA Governor Philip Lowe following on from the policy meeting added further pressure to the Australian Dollar, speaking earlier he said:
Lowe, said:
‘The outlook for the global economy has improved over recent months due to the development of vaccines. While the path ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than there were a few months ago.
‘That recovery, however, remains dependent on the health situation and on significant fiscal and monetary support. Inflation remains low and below central bank targets.’
Pound (GBP) Heads Higher as Investors Optimistic Over Coronavirus Pandemic
The Pound (GBP) pushed higher this morning, as the currency finds support in its successful vaccine rollout and slow decrease in coronavirus infections.
The UK has turned to door-to-door testing to combat the more deadly South African variant of the virus, with eight postcodes in the UK reporting cases not recorded from travel.
Mobile testing and home testing kits are also being used by the government to curb the variant from causing more havoc across the UK.
However, a steady decrease in newly reported coronavirus infections is causing investors to be optimistic that the UK will be eased out of the national lockdown at the start or March, which could kick start the recovery of the economy.
GBP/AUD Exchange Rate Forecast: UK Services PMI to Put Pressure on Sterling?
For Pound investors the key focus in the coming days will be the UK’s Markit Services PMI for January, the final reading of the month is expected to confirm a contraction in the sector which could add pressure to Sterling.
GBP investors will also look to the Bank of England’s (BoE) first policy meeting of 2021, though no changes are expected, if policymakers are optimistic surrounding the state of the UK economy, GBP could be supported and pushed higher.
The GBP/AUD exchange rate will also be fuelled by any further coronavirus developments, which could cause volatility between the pairing.
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