GBP/AUD Exchange Rate Stable Following BoE Rate Cut
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning as markets respond to the Bank of England’s (BoE) announcement of an emergency rate cut.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.9828, virtually unchanged from this morning’s opening rate.
Pound (GBP) in Spotlight as UK Budget Looks to Support BoE Monetary Easing
If an unscheduled rate cut from the BoE wasn’t enough to keep GBP investors busy today, they will also have to contend with the UK’s first post-Brexit Budget.
It’s worth nothing that these two major events falling on the same day is more than just a coincidence.
The BoE and Treasury appear to have made a concerted effort to coordinate their monetary and fiscal stimulus to help shore up the UK from the economic impact of the coronavirus, something which is reflecting well on the Pound (GBP) this morning.
Karen Ward, chief market strategist at J.P. Morgan Asset Management, comments:
‘All eyes are now on the Chancellor to see if he announces a big increase in spending in his Budget today. If he does this would be the first instance of a truly coordinated monetary and fiscal push.
‘Investors may be comforted by the fact that policy makers are willing to deploy their full ammunition.’
Chancellor Rishi Sunak’s Budget is expected to include a major increase in public spending, with government investment forecast to surge from 2.2% of GDP to 3%.
This is expected to include short-term measures to protect against the coronavirus as well as plans for road, rail and broadband projects as part of Boris Johnson’s plans to ‘level up’ the UK.
The Chancellor will deliver the budget at 12:30 GMT.
Australian Dollar (AUD) Buoyed by PM’s Stimulus Plans
Meanwhile, the Australian Dollar (AUD) is holding its own this morning in spite of growing uncertainty regarding the coronavirus.
This comes as Australian Prime Minister Scott Morrison announced a AU$2.4bn health package to help combat the coronavirus.
The stimulus measures were welcomed by AUD investors and also helped to offset a gloomy consumer confidence index from Westpac bank, which reported fears over the coronavirus saw household sentiment fall to its lowest levels since 2015.