GBP/AUD Exchange Rate Touches Four-Week High on RBA Rate Cut Signals
The Pound Australian Dollar (GBP/AUD) exchange rate struck a four-week high today, as the RBA’s Philip Lowe made it clear that another rate cut could be on the cards this year.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8384 leaving the pairing just shy of a four-week high.
Australian Dollar (AUD) Falters on RBA Rate Cut Hints
The Australian Dollar (AUD) finds itself on the defensive this morning as investors shy away from the currency following remarkets from Philp Lowe, Governor of the Reserve Bank of Australia (RBA).
Following on from the RBA’s rate cut earlier this month, Lowe signalled that interest rates are likely to continue to move lower as the bank seeks to boost inflation and strengthen Australia’s jobs market.
Lowe said:
‘It is not unrealistic to expect a further reduction in the cash rate as the [RBA] board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with the medium-term target.’
However at the same time Lowe warned that rate cuts alone would not be enough to provide a major boost to the economy, as he called on governments to boost their efforts to spur economic growth.
Pound (GBP) Muted as Retail Sales Contract
Meanwhile the Pound (GBP) is currently struggling to advance following the publication of the UK’s latest retail sales figures.
The ONS reports that sales growth declined by 0.5% last month, having previously contracted 0.1% in April.
This limited the appeal of Sterling this morning as it added to signs that the UK economy has struggled in the second quarter.
How Will BoE Rate Decision Impact the GBP/AUD Exchange Rate?
Coming up later today we have the Bank of England’s (BoE) June policy decision which is likely to shape movement in the Pound Australian Dollar (GBP/AUD) exchange rate through the second half of this week’s session.
While no policy changes are expected from the BoE this month, GBP investors will be eager to learn more about the bank’s outlook for monetary policy through the rest of 2019.
BoE Governor March Carney previously warned that markets were ‘underestimating’ the pace at which the bank would seek to raise interest rates and the focus will largely be on whether or not this still holds true, with Sterling likely to jump if Carney remains broadly hawkish in his outlook.
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