The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate softened by around -0.50% on Friday morning.
Although the Reserve Bank of Australia’s decision to cut their cash rate by 25 basis points caused an initial ‘Aussie’ (AUD) declination, Thursday’s statement showed their reluctance to fall into the trap of an easing cycle. This, in turn, allowed the South Pacific asset to rebound versus many of its major peers.
The Pound Sterling, meanwhile, is generally holding steady versus the majority of its most traded currency rivals ahead of UK trade data, due for publication later on Thursday. A slight declination can be attributed to the Bank of England’s (BoE) inaction during their most recent policy meeting.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.9544.
Pound Sterling (GBP) Exchange Rate Holding Steady ahead of Trade Data
With most economists expecting the BoE to remain dovish in their policy outlook, the British institution’s inaction had little impact on the Pound. However, as analysts debate the consequences of a delay to a rate hike, the Pound is edging lower versus many of its peers.
‘The amount of stimulus now in the pipeline means that rate-setters cannot say they have no plans to ever raise rates again,’ Berenberg bank economist Rob Wood said. ‘In our view, the market has gone too far in pushing back the timing of rate hikes.’
Those invested in the Pound will be hoping British trade balance data will print positively in order to provoke upward momentum. However, if the forecast figures are anything to go by, the likelihood is that the Pound will soften.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low today of 1.9503.
Australian Dollar (AUD) Exchange Rate Strengthens on RBA Statement
In the aftermath of a statement made by the RBA following the rate decision which saw the cash rate cut from 3.0% to 2.75%, the ‘Aussie’ strengthened versus many of its major rivals. Although the statement showed that the RBA is more cautious about the nation’s economic outlook, policymakers also showed reluctance to continue easing for fear of causing a housing bubble.
‘Given the large increases in housing prices in some regions and ongoing strength in lending to investors in housing assets, housing market developments will need to be watched carefully,’ the RBA said in its statement. ‘The bank is working with other regulators to assess and contain economic risks that may arise from the housing market.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Hold Losses
Given that the British trade data is forecast to show a widening of the deficit, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to continue trending lower for the remainder of Friday. With that being said, however, there is the possibility for ‘Aussie’ fluctuations if US data leads to a Dollar surge. China’s trade balance data, due for publication on Sunday, has the potential to provoke changes for the GBP/AUD exchange rate.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate reached a high today of 1.9654.
