Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate – ‘Aussie’ gains again as RBA holds rates

Pound to Australian Dollar exchange rate chart

The Australian Dollar jumped higher against the Pound, Euro, US Dollar and other most traded peers early on Tuesday after the Reserve Bank of Australia chose to maintain interest rates at 2.5% and shifted its policy stance away from further rate cuts.

The RBA decision was widely expected by economists and provided confidence for the health of the Australian economy. The RBA said that “the most prudent course is likely to be a period of stability in interest rates.”

The bank had previously made eight rate cuts since late 2011 which achieved only a patchy recovery. The Oceanic nation is struggling with a sharp down turn in mining investment which has sent unemployment higher.

Another bit of good news for the ‘Aussie’ was the RBA comments that it was now satisfied with the currency’s current range. Over previous months various RBA policy makers have done their best to try and talk down the currency’s value.

“The RBA statement today has made some emphatic steps away from their previously dovish stance to a neutral stance. On balance this is a bigger shift than may have been expected and should continue to boost the Australian Dollar,” said a currency strategist at RBS.

The Pound was able to recover ground against the US Dollar and Euro on Tuesday after a report showed that construction activity in the UK expanded to its highest level since 2007. The Markit/CIPS construction PMI climbed to 64.6 in January, up from December’s level of 62.1, the biggest expansion seen since the financial crisis.

Sterling is likely to recover some ground against the ‘Aussie’ as a result of the data.