The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate took a dive in Tuesday’s European session after the Reserve Bank of Australia (RBA) surprised markets by keeping interest rates at 2.25%.
At its meeting today, the Board decided to leave the cash rate unchanged at 2.25 per cent – http://t.co/ahK2GWuwLx
— RBA (@RBAInfo) April 7, 2015
Many economists had expected another cut to the official cash rate (OCR) after the recent 25 basis point downward adjustment.
The RBA statement read: ‘At today’s meeting the Board judged that it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will continue to assess the case for such action at forthcoming meetings.’
The move caused the ‘Aussie’ to soar, but something experts closely watched was the spike in the Australian Dollar exchange rate just before the announcement. The move is the third intuitive guess ahead of an influential RBA event, causing concerns that a leak could be interfering with the market.
Australian Dollar (AUD) Exchange Rate Jump under ASIC Investigation
The rise in the Australian Dollar is seen to be too calculated to be coincidental and therefore the Australian Securities and Investments Commission (ASIC) have begun a new inquiry into the situation.
The commission stated: ‘ASIC confirms it will investigate a spike in the Australian Dollar shortly before the Reserve Bank’s monetary policy decision today. The investigation will look at trading in the Dollar prior to the RBA’s interest rate decision statement at 2.30pm.’
‘ASIC is also investigating foreign exchange movements shortly before the RBA’s announcements in February and March 2015.’
Meanwhile, the Pound Sterling exchange rate also felt the effects of central bank announcements in Tuesday’s European session when the Bank of England’s (BoE) Financial Policy Committee announced that the ongoing Greek negotiations could have a negative effect on UK banks if the nation continues to make little progress.
Furthermore, the BoE committee urged UK banking institutions to begin making back-up plans for both an escalation of the current crisis as well as a Greek exit (Grexit).
The BoE stated: ‘The economies of other peripheral Euro area countries were strengthening and the resilience of their banking systems had improved. Nevertheless, the committee judged that, were Greece and its Euro area partners to be unable to reach an agreement, more significant effects could arise.’
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is forecast to fluctuate further on central bank developments this week with the BoE scheduled to release its interest rate announcement on Thursday.
The decision is unlikely to see a move from the 0.50% interest rate benchmark, which has remained unchanged for the latter seven years.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is trading at 0.5165, recording +1.30% market movement. The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 1.9366.
