GBP/AUD Exchange Rate Steady as RBA Cuts Rates
The Pound Australian Dollar (GBP/AUD) exchange rate is rangebound in trade this morning as markets digest the Reserve Bank of Australia’s (RBA) decision to cut rates.
At the time of writing the GBP/AUD exchange rate is virtually unchanged this morning, leaving the pairing trading at around AU$1.8153.
Australian Dollar (AUD) Holds Steady, But Are More RBA Cuts Inbound?
The Australian Dollar (AUD) is showing remarkable resilience this morning after the RBA announced it would be cutting interest rates to a historic low of 1.25%.
This is largely thanks to the move having already been priced in by markets ahead of time, but was also helped by a balanced policy statement from RBA Governor Philip Lowe.
However as always it didn’t take long for investors to turn their focus towards what comes next, with economists forecasting that the RBA is unlikely to be finished just yet.
Current speculation suggests that the RBA could cut rates again in August, something that will likely help to keep a lid on the Australian Dollar over the next couple of months.
Pound (GBP) Muted as Construction Growth Sinks
At the same time, the Pound (GBP) has been left to tread water this morning following the publication of the UK’s latest PMI figures.
According to IHS Markit, growth in the UK’s construction sector unexpectedly slumped last month, the third contraction so far this year.
Once again it appears that Brexit uncertainty was to blame, with clients delaying new projects until they have a greater idea of what will happen in October, with firms freezing hirings in response and denting sentiment.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said:
‘The biggest shock however, came in the form of job creation as hesitancy to hire resulted in the largest drop in employment for six and a half years.’
GBP/AUD Exchange Rate Forecast:
Looking ahead to tomorrow, the Pound Australian Dollar (GBP/AUD) exchange rate may retreat, following the release of the UK’s services PMI.
Given that both the manufacturing and construction sectors contracted last month, it’s a fair bet to expect that the services sector may have followed suit, with a slump in the largest part of the UK economy unlikely to reflect well on Sterling.
In the meantime, Australia will publish its GDP figures overnight on Tuesday, with the ‘Aussie’ potentially finding support if Australia’s economy accelerated in line with expectations in the first quarter.