The GBP to AUD exchange rate struggled to hold onto gains as last week's session closed on the foreign exchange markets.
- The Pound to Australian Dollar exchange rate today: -0.19pct at 1.74830 .
- The Australian Dollar to Pound Sterling exchange rate today: 0.57198.
Overnight the Australian central bank cut interest rates by 0.25pct to 1.5pct. Reasons given included low inflation and diminishing upside risks from the housing market.
The Pound slightly extended its advances against the Australian Dollar on Monday afternoon, as risk sentiment waned while the Reserve Bank of Australia’s (RBA) August meeting approached.
The relatively high chance of an RBA rate cut during Tuesday’s Asian session means that the ‘Aussie; remained weak throughout Monday.
GBP/AUD could surge even higher on Tuesday if the RBA cuts Australian rates as many speculate.
In spite of the Australian Manufacturing PMI strongly bettering expectations and the UK measure falling further than forecast this didn’t stop the GBP/AUD trending narrowly higher.
With markets confident that the Reserve Bank of Australia (RBA) will opt to ease monetary policy at its August meeting investors have seen little reason to favour the ‘Aussie’ at this juncture.
Last week started badly for the Pound to Australian Dollar exchange rate when the CBI Business Optimism index crashed from -5 to -47 against expectations of a slighter decline to -15.
Wednesday’s GDP figures didn’t cheer investors either, despite being stronger than forecast, as markets worried that the Brexit vote may have come at a moment when the UK economy was beginning to strengthen.
On Thursday, Lloyds announced job cuts in anticipation of lower interest rates from the Bank of England (BoE) and Friday’s consumer confidence index showed the steepest drop in sentiment in 26 years, further weakening Pound Sterling exchange rates.
However, GBP/AUD spot rate ended the week having recovered all losses made since trade opened on Monday, although that meant the pairing was slightly down on the week’s high of 1.7660.
Latest Aus Dollar/Pound Sterling Exchange Rates
On Wednesday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
Today finds the pound to pound spot exchange rate priced at 1.
At time of writing the pound to new zealand dollar exchange rate is quoted at 2.096.
The pound conversion rate (against us dollar) is quoted at 1.246 USD/GBP.
NB: the forex rates mentioned above, revised as of 24th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Rate cut bets have weighed on the Australian Dollar (AUD) exchange rates over the past few days after disappointing inflation figures paved the way for RBA easing.
The recent Reserve Bank of Australia (RBA) meeting minutes had strongly hinted that Wednesday’s consumer price index data would be important in influencing policymaker outlook.
The actual results were not as decisive as markets would have liked; Q2 consumer price growth slowed above forecasts from 1.3% to 1%, but the RBA trimmed mean CPI unexpectedly held steady at 1.7% instead of dropping to 1.5% as predicted.
With no clear signal of strengthening inflation, most economists held their expectations for a rate cut from the RBA, which would take the official cash rate below the already historic low of 1.75%.
Could there be further headwinds in store for Pound Sterling (GBP) exchange rates from Tuesday’s construction PMI for July?
The British pound is likely to start the week facing soft appetite in anticipation of Tuesday’s Market/CIPS construction PMI for July.
The last measure of construction shocked markets after showing a severe and unexpected contraction in the run-up to the UK referendum; the index was forecast to weaken from 51.2 to 50.7, but instead tumbled to 46.0.
Considering how the first PMIs released since the Brexit decision was announced fell markedly further into contraction than was forecast - with the exception of manufacturing - there is a chance the latest construction index could slide further into contraction territory.
GBP/AUD Forecast: Downside Risks Ahead with Potential RBA Rate Cut Approaching
Since the recent Q2 inflation data failed to conclusively point to strengthening consumer price growth, markets still hold expectations of an interest rate cut from the Reserve Bank of Australia (RBA) as a result of its policy meeting on Tuesday.
Speaking after the latest CPI data, Chief Analyst at Capital Economics Paul Dales stated;
‘It would be wrong to conclude that this means the RBA won't cut rates from 1.75 per cent next week. After all, the RBA's expectation that underlying inflation will be below the 2-3 per cent target range until mid-2018 is based on an assumption that interest rates would fall to 1.5 per cent.‘
‘Australia's second-quarter CPI inflation figures make a rate cut to 1.5 per cent at next Tuesday's RBA meeting pretty much a done deal. We believe that continued low underlying inflation will prompt the RBA to eventually reduce rates to 1 per cent.’
Key GBP and AUD Related Economic / Forex Events This Week
This week's AUD-focused events include the AIG Manufacturing Index source, HIA New Home Sales source, MI Inflation Gauge source, Aussie Building Approvals source, Trade Balance, Cash Rate, RBA Rate Statement source, Commodity Prices, AIG Services Index source, Retail Sales, AIG Construction Index and the RBA Monetary Policy Statement.