The Pound to Australian Dollar (GBP/AUD) exchange rate plummeted by over 0.6% following the release of Australia’s Consumer Price Index.
Economists had forecast that the index climbed by 0.5% in the second quarter of the year on a quarter-on-quarter basis, with the measure being up 3.0% on the year.
Their predictions proved correct and as the report helps to ease concerns that the Reserve Bank of Australia will cut interest rates in the near future the Australian Dollar broadly rallied.
The Australian Dollar to US Dollar exchange rate advanced to a two-week high in the aftermath of the report’s release.
Economist Michael Blythe had this to say of the result: ‘The Reserve Bank is probably happy to leave rates where they are for quite a while yet, and market pricing for some chance of a rate cut looks misplaced. The underlying numbers look a fraction higher – they’re a warning sign that the inflation backdrop is not as benign as markets want to price in at the moment’.
The Pound to Australian Dollar (GBP/AUD) exchange rate hit a low of 1.8037 as the European session continued and the Bank of England (BoE) published its latest policy meeting minutes.
It had been hoped that the minutes would show that the nine member Monetary Policy Committee disagreed on the timeline for raising interest rates, with at least one voting in favour of the decision. However, that proved not to be the case and the minutes were more dovish in tone than anticipated.
As well as showing that the central bank was unanimous in its decision regarding interest rates, the minutes revealed that the MPC believes that the overheating UK housing market might be cooling slightly – a fact which could delay rate increases.
The Pound recorded moderate losses across the board after the minutes were issued.
However, declines were a little tempered by the news that more people than forecast applied for loans for house purchases in June.
The loans figure came in at 43265 rather than the 41375 anticipated. This was up from a positively revised result of 41881.
The Pound to Australian Dollar (GBP/AUD) exchange rate extended its decline to over 0.75% after the minutes were issued. Further movement in the pairing could occur as a result of the Confederation of British Industry’s Reported Sales figure. It is expected that the sales measure advanced from 4 to 15 in July.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9445,
Australian Dollar,,Euro, 0.7012,
Australian Dollar,,Pound, 0.5533,
Australian Dollar,,New Zealand Dollar, 1.0827,
US Dollar,,Australian Dollar, 1.0653,
Euro,,Australian Dollar, 1.4376,
Pound Sterling,,Australian Dollar, 1.8174,
New Zealand Dollar,,Australian Dollar, 0.9231,
[/table]
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