GBP/AUD Conversion Rate Predicted to Slide after the Bank of England Cut Growth Forecasts
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dived by around -0.9% on Thursday afternoon.
As had been projected by the majority of analysts, the Bank of England (BoE) voted to hold the overnight cash rate at 0.50%. However, it was a surprise to see all nine policymakers vote unanimously given that long-time dissenter Ian McCafferty was expected to maintain his hawkish outlook. The central bank also cut growth forecasts and stated that inflation is likely to remain below target for at least two years, with labour costs forecast to cool. Sterling losses were reduced slightly following the press conference with Governor Mark Carney, however, after stating that all policymakers see the next move on rates as a hike.
‘My impression was a firmly dovish take from the BOE, at least until Carney said the whole of the MPC think the next move in interest rates is up,’ said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd in London. ‘Given the weak global backdrop, policy makers could shift their thinking toward a cut, and I would not rule out that possibility. That will send the Pound lower.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0200.
AUD/GBP Conversion Rate Predicted to Rally on US Dollar Weakness
After global stock prices advanced, demand for the high-yielding Australian Dollar improved significantly. ‘Aussie’ (AUD) appreciation was further bolstered by NAB Business Confidence which rose from 1 to 4. Perhaps the most supportive contributor to the Australian Dollar uptrend today, however, is a massive drop in the value of the US Dollar. Triggered by weaker-than-anticipated US services output, selling pressure has seen the US trade weighting diminish considerably. What’s more, a slew of disappointing domestic ecostats has caused many traders to predict that the Federal Reserve will delay a cash rate increase for a considerably longer time than had been originally forecast.
‘The Dollar is on its knees,’ said Richard Benson, head of portfolio management at currency fund Millennium. ‘This morning I think it’s just model flow on a lot of technical breaks yesterday. Probably we will now have some stability ahead of U.S. payrolls tomorrow.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 2.0143 during Thursday’s European session.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast: Australian Construction Data to Provoke Volatility
Given the absence of further domestic data publications today, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to hold losses for the remainder of the European session. During the Australasian session, however, the GBP/AUD exchange rate is likely to see volatility in response to January’s AiG Performance of Construction Index. Australia’s Retail Sales reports and the Reserve Bank of Australia (RBA) Statement on Monetary Policy will also be significant. With an absence of British data, the Pound is likely to continue to struggle from today’s dovish BoE outlook.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced to a high of 2.0379 during Thursday’s European session.
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