GBP/AUD Exchange Rate Buoyed Following RBA Rate Decision
The Pound to Australian Dollar (GBP/AUD) exchange rate is on the rise this morning, in response to the Reserve Bank of Australia’s (RBA) cautious outlook following its latest rate decision.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7988, up roughly 0.4% from this morning’s opening rate.
Australian Dollar (AUD) Undermined by RBA’s Cautious Tone
The Australian Dollar (AUD) is stuck on the back foot against the Pound (GBP) and majority of other peers this morning in the wake of the Reserve Bank of Australia’s (RBA) interest rate decision.
As was widely expected by economists, the RBA opted to leave its monetary policy unchanged this month, leaving interest rates at a record low of 0.25%.
The RBA also signaled this ultraloose monetary policy is likely to remain in place for the foreseeable future, with the bank’s cautious outlook weighing on the ‘Aussie’.
The RBA’s statement read:
‘This accommodative approach will be maintained as long as it is required. The Board will not increase cash rate target until progress is made on our employment and inflation objectives. It’s likely that fiscal, monetary support will be required for some time.’
Also dragging on AUD exchange rates are worries over a recent surge of coronavirus cases in the state of Victoria, which has forced the government to reintroduce strict lockdown measures on metropolitan Melbourne.
Upside in Pound (GBP) Limited Ahead of Chancellor’s Summer Statement
The Pound (GBP) meanwhile, faces only limited upside today as GBP investors brace for Rishi Sunak’s summer statement on Wednesday.
The Chancellor is set to update the nation on the state of the UK economy as well as announce new spending and stimulus measures as part of a supplementary budget, designed to support the country’s post-coronavirus recovery.
Sunak is expected to announce measures including tax cuts and other incentives to encourage consumer spending as well as offering some direct support to businesses which have been hardest hit by the lockdown.
Should GBP investors believe the measures announced tomorrow will help accelerate the UK’s economic recovery then it’s likely we could see the Pound jump, but a lacklustre response could prove even more damaging to Sterling given the currency’s precarious position due to Brexit.